Current fears regarding a repetition of the 2007-08 food price crisis are not completely justified, noted the EU executive.
Anxiety about prices was sparked last week with the publication of the United Nations' latest food price index, which showed a 32% rise in wholesale prices of agricultural commodities in the second half of 2010.
But EU officials underlined that the UN Food and Agriculture Organisation index results are "not true generally," as the index only looks at the export share of developing countries for each commodity.
As the Group of 20 leading economies prepares to discuss ways to tackle soaring food prices at its Paris meeting on 27-28 January, Commission officials stressed that before trying to find a solution, leaders would need to define the problem in order to get off on the right track: what is driving up prices?
Much has been said and reported about the effect on prices of soaring demand from emerging economies, decreasing yields due to unpredictable weather patterns, and the impacts of biofuel production or energy prices, for example.
According to officials, however, the biggest problem is the link between agricultural markets and other commodity markets that have nothing to do with agriculture. While in the past assumptions regarding food price trends were based on agricultural trade patterns, "now prices are affected by completely different things," they said.
In particular, the financial markets are dragging prices up and down irrespective of agricultural realities, one noted.
The EU officials' comments on food prices were made off the record to journalists attending a briefing on new market forecasts for agricultural production and consumption in the European Union between 2010 and 2020.
Bursting the food bubble
Meanwhile, in a separate development, environmental analyst Lester Brown, president of the Washington-based Earth Policy Institute, wrote this week in Foreign Policy magazine that the great food crisis of 2011 is very real and "is not going away anytime soon".
"Over the last few decades we have created a food production bubble - one based on environmental trends that cannot be sustained, including overpumping aquifers, overplowing land and overloading the atmosphere with carbon dioxide," he argued.
"The question is not whether the food bubble will burst, but when," Lester added.
In his new book on the food bubble, he argues that the world is "only one poor harvest away from chaos" because when the food bubble bursts, food prices will soar worldwide, threatening economic and political stability everywhere.
To deflate the bubble before it bursts, Lester urges policymakers to "redefine security" and reverse the trends of climate change, population growth, water shortages, spreading hunger and failed states, which he says are "the principal threats to our future".
According to Lester, "a corresponding reallocation of fiscal resources from military budgets" to budgets for climate and population stabilisation, water conservation and other new threats to security is necessary.