Food prices will not rise drastically in 2012 as they have in recent years, though no large drop is expected as a result of economic slowdown, the new director-general of the U.N.'s Food and Agriculture Organisation (FAO) said on Tuesday.

Jose Graziano da Silva, the Brazilian who replaced Senegal's Jacques Diouf at the helm of FAO at the start of 2012, said volatility in food markets was likely to continue due to economic instability and currency market fluctuations.

Prices will not be going up as in the sense of the last 2-3 years, but will also not drop down. There may be some reductions, but not drastic, Jose Graziano da Silva told a news conference.

He said he did not expect the economic slowdown in Europe to impact funding for FAO's projects, but said it was likely to increase the number of people facing hunger in the world.

(Reporting by Catherine Hornby)