Poor countries are still struggling with rising food prices, despite sharp falls in international markets and a plentiful global supply of cereals, the U.N. Food and Agriculture Organisation has warned.

World cereal production is expected to decline by 3 percent this year from its record in 2008, but would still be the second largest crop ever. Nonetheless, the FAO says cereal prices in developing countries remain very high - in some cases at record levels.

Prices of cereals - the most important staple food - are considerably higher than a year ago in 80 percent of 58 developing nations analysed, according to the FAO's latest quarterly report on crop prospects.

Depending on the type of cereal, prices are higher than three months earlier in 35 to 65 percent of those countries, and in 10 to 30 percent, they were the highest on record in late March.

This contrasts markedly with declining international trends. The FAO's headline Food Price Index, an average of international prices for meat, dairy, cereals, sugar and oils and fats, was at 141 in March - a significant fall from June's peak of 214.

"The message is that this food crisis is far from finished in developing countries, and this adds to a situation of financial crisis," said Liliana Balbi, a senior economist with the FAO's Global Information and Early Warning System.

The U.N. food agency says 32 countries - including Afghanistan, Sri Lanka, Somalia and Sudan - are still experiencing food emergencies, and persistently high prices in developing nations are causing more hardship for millions already suffering from hunger and the global economic downturn.

"There is already some information that, for example, remittances which have an important weight on incomes for poor households ... have declined tremendously," said Balbi.

World Bank researchers predict remittances - money sent home by family members working overseas - will fall more than originally expected this year, from $305 billion in 2008 to around $290 billion in 2009.

The FAO estimates that over one billion people in the world will go hungry this year because of the combined effects of the global economic crisis and high food prices.

Those worst affected are poor people in urban areas and farmers who are not producing enough, because they have to buy food at local markets.

POOR HARVESTS, LOWER IMPORTS

Singling out hotspots of hunger in the world, the FAO says food rations have reportedly been halved in North Korea following reduced supplies, and more than 17 million people in East Africa still face serious food insecurity because of poor harvests and conflict.

In southern Africa, high domestic prices, sluggish imports and high demand for food during the peak hunger months have worsened the food security of around 8.7 million people. That includes over 5 million people in Zimbabwe, where a cholera outbreak also threatens health and nutrition among vulnerable groups.

An April analysis of 58 developing nations covered by the FAO's recently launched food price database shows prices for all food commodities are higher than a year ago in 78 percent of cases, and higher than three months earlier in 43 percent. In 17 percent of cases, the latest quotations are the highest on record.

Balbi pointed out that the 12-month comparison gives a rather conservative picture because prices were already at crippling levels a year ago.

Sub-Saharan Africa is the worst-affected region - domestic rice prices are much higher in all countries analysed, while prices of maize, millet and sorghum are higher in 89 percent.

In other parts of the world, prices are particularly elevated for rice in Asia, as well as for maize and wheat in Central and South America.

FAO says one of the factors pushing up prices in poor countries is the slow pace of commercial cereal imports. For example, in southern Africa, cereal imports in the year to March were less than two-thirds of the amount required, and around a fifth lower than in 2007-2008.

"The cereal imports they normally do have been very delayed, probably because of very high prices in their marketing year," said Balbi.

Volumes of imported food aid have also been lower. "The situation is improving, but all last year, the reserves were extremely low, and developed country exporters and donors were less generous," said Balbi.

On a more positive note, the report forecasts that the cereal import bill for low-income countries with a food deficit will decline in the 2008-2009 marketing year to $28 billion, down 27 percent from the previous season's all-time high, thanks to lower international prices and freight rates.

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