by Nick Mathiason

America and Europe should prepare for massive rises in oil and food prices, a leading analyst at Goldman Sachs has warned.

Tomorrow the World Bank, the United Nations and politicians from a number of countries gather in London to discuss food security. Concern is growing that global population growth, climate change, pressure on water supplies and increasing use of biofuel crops will spark a new wave of food shortages and rising prices in the developing world.

But Jeffrey Currie, global head of commodities research at Goldman Sachs, said demand for commodities would hit developed countries too. "Developed markets will pay more for copper, soya beans and oil. Primarily, America will have to make significant adjustments in the way it consumes natural resources.

He added: "Emerging markets will crowd out developed market demand. Once we have a recovery in economic activity these problems will resume."

Currie also warned pressure to grow biofuels would eat further into food production. Land grabs by China, South Korea and sovereign wealth funds in sub-Saharan Africa to feed their populations have grown in recent months. He welcomed the move as bringing much-needed cash into African agriculture.

His comments will be scrutinised because banks were criticised by some for fuelling speculation in commodities last year. Money invested in mortgage-backed securities were quickly diverted into oil, copper and food futures.

Mark Cackler, manager of the agriculture and rural development department at the World Bank, said: "We expect commodity price volatility will increase and prices will remain above average until at least 2015."

As the UN's Food and Agriculture Organisation says the number of starving people has risen from 830m to 1bn in two years, the World Bank is now stepping up its investment in agriculture after decades of ignoring it. Harriet Lamb, executive director of the Fairtrade Foundation, said: "If there is a sustained commodity price rise it will correct a 40-year decline. That's good news so long as there are the right policies to allow smallholders to benefit, as well as speculators and middlemen."

http://www.guardian.co.uk/business/2009/nov/01/goldmansachs-population