Mumbai: Rising food prices are making inflation control a more difficult task and this may hurt economic growth and the reform process, prime minister Manmohan Singh has warned.

"A steep rise in food prices will make inflation control more difficult and can thereby hurt the cause of macro economic stability," Manmohan Singh said at Global Agro Industries Forum.

Singh also received the `Agricola Award' by FAO for his contribution to the farm and social sectors.

While persistent food shortages and rising food prices may derail reform and the opening up of the economy, the prime minister ruled out any "blind controls" and depressing agriculture's terms of trade to rein in increasing prices.

India's wholesale price-based inflation rate rose above a three-year high at seven per cent, prompting multilateral funding agencies like the International Monetary Fund, Asian Development Bank as also the prime minister's own advisory panel to project a moderation in economic growth in the current fiscal.

"The constituency for economic reforms, so necessary for growth, would also diminish. Pressures would mount for restrictive trade practices," the prime minister said.

"Sharply rising food prices can slow down poverty alleviation, impede economic growth and retard employment generation," he said.

While this will harm global economy in general, developing world will be "seriously hurt", he added.

The UN Food and Agriculture Organisation, meanwhile, warned that rising food prices and growing shortages can lead to riots in some countries. Global commodity prices would, however, remain high for now owing to imbalances in supply-demand, it added.

Speaking to reporters after a meeting with agriculture minister Sharad Pawar in in New Delhi, FAO Director General Jacques Diouf said the rise in prices of food commodities all over the world, is not going to "ease in the short term in view of supply-demand situation."

Diouf also blamed the wrong policies of the last two decades for the present crisis. "We are paying the consequences of wrong policies over the last 10-20 years,'' he said.

Addressing the first Global Agro Industries Forum, Diouf said the world grain stocks are at its lowest since 1980s with just 4-5 million tonnes of cereals stocks that can last only 2-3 months.

"The world food situation is very serious today with food riots reported from many countries like Egypt, Cameroon, Haiti, Burkina Faso and Senegal. We fear that this may spread to many more countries," he added.

Diouf attributed rising commodity prices across the world to increasing demand from the developing countries, particularly in China and India, and diversion of food grains towards production of bio-fuels.

The rising income levels of people in developing economies are also driving up food demand, he said.

The FAO, he said, has called an emergency meeting of heads of state during June 3-5 to discuss the overall situation, including impact of climate change. Diouf said the meet would also discuss whether to stop biofuel production in the developed countries, which are diverting food grains for fuel.

Diouf said currently 100 million tonnes of cereals are being diverted for biofuel production in one country (US) and the quantity is estimated to increase 12-fold by 2017.

The FAO also asked the world community to bring structural changes. "The situation (food shortages) is due to a structural problem and a decision requires to be taken at the structural level across the world," he said.

The drought in Australia and Kazakhstan, floods in India and Bangladesh, cold temperature in China, as also the climate change are affecting supply of food grains, he said.

Diouf suggested raising productivity level of crops, investment in rural areas and better water management to increase food production.

Meanwhile, the World Bank said the world is living through a structural shift towards higher food prices that will be hard to reverse.

Rising food prices are likely to persist for the medium term, World Bank president Robert Zoellick said. He said strong demand, change in diet and the use of biofuels as an alternative source of energy have reduced world food stocks.

Speaking to reporters before the Bank's spring meeting due next week, Zoellick said the 185-member World Bank would work with other organisations to deal with the crisis by seeking ways to help farmers, especially in Africa, to increase productivity and improve access to food through schools or workplaces.

Zoellick said the Bank sees serious risk of a significant increase in poverty, which for some countries will reverse gains made over the past five to 10 years.
 
The World Bank will release a report later this week projecting that food prices will likely continue to move higher this year and next before starting to ease a bit, but Zoellick said they would likely remain high by historical standards due to higher global demand.