Export bans will lift food prices: UN

The United Nations urged governments Wednesday not to import export restrictions to cope with rising food prices, saying they might make matters worse by driving global prices higher.

The Rome-based UN Food and Agriculture Organization issued an updated policy guide for governments in the developing world who are grappling with the impact of high food prices.

The FAO has warned that prices of wheat and other staples rose alarmingly in 2010 and that some poor countries, particularly in Africa, may be headed for a repeat of the 2007-2008 food crisis that led to deadly riots in Africa, Asia and the Caribbean.

Already, rising food prices have been in part behind recent violent protests in Tunisia and Egypt.

During the 2008 crisis, the world's biggest rice producers, Thailand, Vietnam and India, curbedexports to protect domestic supply, leading to record high prices.

Last year, Russia imposed a wheat export ban after a severe drought hit its harvest, pushing prices up sharply in August. Ukraine another major grain exporter imposed export quotas in October.

African countries are most at risk since nearly all are net importers of cereals.

City residents, small farmers, fishermen and farm workers are most hard hit since they don't produce all that they need to eat; the poorest among them spend more than three-quarters of their income on food.

Canadian prices could rise 7%

In Canada, retail food prices have risen just 1.4 per cent in the past year.

BMO Capital Markets, in a recent commentary, called that a "remarkably muted result in the face of raging food prices globally" and a 37 per cent rise in Canadian agricultural commodity prices.

But it noted that there is about a 10-month lag between food price changes between the commodity markets andthe consumers.

"If past relationships hold," it said, "the recent run up in commodities will lift Canadian food prices by about six seven per cent by the end of 2011.

The strong Canadian dollar may help dampen that a bit, but don't expect major relief on that front," BMO said.