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Thu 30 Jul 2009 07:51 AM

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Arab farm fund recommended to fight price rises

Official report warns that region needs to act to keep food prices under control.

The creation of an Arab farm fund and the establishment of a food stockpile in the region have been recommended in a new report to prevent future price surges.

An increase in food prices over the past two years has severely hit the living standards of Arab citizens and this could widen poverty and unemployment in the absence of government counter-measures, warned the study by the Arab Organisation for Agricultural Development (AOAD).

Although the prices of cereal and other main farm products have eased since the start of the global financial crisis, they have remained high compared with the previous years and are projected to remain so through 2009, Emirates Business reported on Thursday, citing the report authors.

The Khartoum-based group said Arab nations needed to take urgent measures to prevent a repetition of prices spikes, including the creation of a farm fund and the establishment of a strategic food stockpile in the region, the paper reported.

The study warned that Arab nations, among the largest importers of farm products, could again suffer from food price spikes in the absence of such measures.

"The increase in food prices have had a severe impact on the Arab countries given their heavy reliance on farm imports. High prices have affected individuals, families, institutions and the nation as a whole," said the AOAD report.

"Low- and medium-income families and individuals have been hit hardest as high food prices have forced them to lessen food consumption and cut spending on health, education and other services," the report added.

"If prices remain high, this could lead to health problems, more poverty, unemployment and other social problems. On a wider level, high food prices have led to worsening inflation in most Arab countries and a rise in the trade gap. This has put further pressure on families."

Poor water resources and flawed farm policies have turned Arab states into the largest food importers in the world and the situation is expected to worsen in the absence of major investments in the sector and other measures.

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