High food prices spur more Eastern European cereal production, FAO

11-Sep-2008 - Last updated on 12-Sep-2008 at 09:07 GMT

Higher food prices have led to larger areas planted with cereals in Russia and Ukraine, which is expected to result in higher agricultural output this year, according to the UN’s Food and Agriculture Organization.

At a meeting held in Paris yesterday, the agency predicted bumper cereal crops in the two countries in 2008.

Output

FAO’s latest estimates place the area sown with wheat in Eastern Europe and the Commonwealth of Independent States (CIS) – of which Russia and Ukraine are the two largest agricultural producers – at 33.8m hectares, an increase of 2.4m hectares.

The agency’s July Crop Prospects report said that area consecrated to wheat, coarse grains and rice in Russia alone is forecast at almost 46m hectares for the 2008 harvest. This is 2.6m hectares more than in 2007.

Aggregate output of wheat in the European CIS countries in 2008 is expected to rise to more than 73m tonnes this year, 13 per cent above last year.

According to the European Bank for Reconstruction and Development (EBRD), which sponsored this week’s meeting together with FAO and the World Bank, "current worldwide market conditions in agriculture remain a cause for concern, and it is vital to increase global output”.

Investment

“The EBRD has an important role to play in helping our region fully exploit its potential and contribute to satisfying the growing global demand for food” EBRD director of agribusiness Gilles Mettetal told attendees.

“The Bank is committed to supporting much needed long-term investments along the supply chain to build up this potential in a sustainable way. This includes investments not only in agroprocessing but also infrastructure, storage capacity and logistics, where significant bottlenecks prevail.”

The two-day meeting in Paris brought together representatives of international finance institutions and donors active in agriculture, with the aim of maximizing the agricultural potential of the Eastern European and CIS region.

It follows an FAO-EBRD meeting in London in March, which had highlighted significant untapped agricultural production potential in the region. The two organizations said that as much as 13m hectares there could be returned to production.

“In March, we discussed opportunities for enhancing agricultural output, and we can see from these figures that benefits are already materializing that could make a real difference on world markets,” said Charles Riemenschneider, director of FAO’s Investment Centre yesterday.

“Both countries have significant exportable cereal surpluses, but more long-term investment is needed to ensure that this supply response is sustainable.”