Global Food Prices Reach “Dangerous Levels” Says New World Bank Report
Global food prices pushed 44 million people into extreme poverty last year, and have reached “dangerous levels” according to a report released today by the World Bank. The bank defines extreme poverty as living on less than the equivalent of $1.25 a day.
Food prices jumped 29% this past year alone. The World Bank’s food price index, which covers the costs of staples such as wheat, maize, sugar and edible oils, has seen sharp increases over the last six months, and rose 15% between October and January. That’s just 3% below the historic high in 2008 that sparked riots in several countries. The cost of wheat for example, has doubled since last year.
“The price hike is already pushing millions of people into poverty and putting stress on the most vulnerable, who spend more than half of their income on food,” World Bank President Robert Zoellick said in a statement today.
If there’s any kind of a silver lining, rice prices, however, haven’t risen as much, and according the BBC, a record harvest is expected this year. And the prices of maize in East Africa, where it is the most important food crop, have fallen by up to 50%, the result of bumper harvests, and the fact that the region doesn’t rely on maize from disaster-hit exporters.
Severe weather around the world, from floods in Australia, to fires in Russia, to major winter storms across the United States, have all contributed to the shortages, and hurt the leading agriculture producers.
Zoellick said although higher food prices were not the main cause of the protests in the Middle East, they were an “aggravating factor.” He is concerned that as countries such as Egypt – a major wheat importer — and Tunisia, look to the roots of their social unrest, higher food prices may add to “the fragility that is always there any time you have revolutions and transitions.”
The World Bank says there’s also concern that Egypt might increase its grain reserves in light of the political situation in the Middle East, and that in turn is pushing up the price of wheat and other grain futures on the commodities market.
Just last week, in fact moments before former Egyptian President Hosni Mubarak announced he was turning over power to Vice President Omar Suleiman, Zoellick told Bloomberg television that the World Bank has been “trying to think of how to help the country get through to the next steps.”
Zoellick warned too, today that a sharp rise in food prices across Central Asia could also have social and political implications for that region, Reuters said.
The World Bank’s Food Price Watch report comes just days before a meeting in Paris of the Group of 20 finance ministers and central bankers from leading economies, which include both developed and developing nations. The state of food prices is certain to be on the agenda, and Zoellick hopes, a priority in the discussions. Figuring out ways for the wealthiest nations to mitigate price swings that can lead to panic and stockpiling – and hurting poorer countries’ access to food — is crucial to stabilizing world food prices.
“There is no room for complacency,” Zoellick said. “Food prices are the key and major challenge facing many developing countries today.”
Photo credit: vauvau