Global food prices stable but high, says World Bank report

Written by Reuters | Washington | Updated: Dec 2 2012, 04:55am hrs
Global food prices remained stable, though close to 2008 record levels, the World Bank said on Thursday, as it warned that a new norm of costlier food was setting in and threatening to increase hunger and malnutrition in the world's poorer regions.

In an update of its quarterly Food Price Watch report, the World Bank said the absence of panic policies, such as food export restrictions, had helped stabilize commodity prices since price spikes in July.

Even as the world seems to have averted a global food price crisis, a growing sense of a 'new norm' of high and volatile prices seems to be consolidating, the World Bank said. The world cannot afford to get used to or be complacent with high and volatile food prices.

The World Bank food price index shows that while prices have stabilized they are 7% higher than a year ago. In particular, grains are up 12% from a year ago and close to the all-time high set during a global food price crisis in 2008, when food riots broke out in Asia and Africa.

The worst droughts in more than half a century in the United States corn belt and food basket regions of the Black Sea pushed up the global prices of wheat and maize this year, at a time that the world economy was slowing and Europe has been engulfed in a debt crisis. On November 8, the Rome-based UN Food and Agriculture Organization said its food index, which measures monthly price changes for a basket of cereals, oilseeds, dairy, meat and sugar, averaged 213 points in October, down two points from the September reading.

UN agencies have estimated that some 870 million people are chronically malnourished. Eradicating hunger is one of the eight UN Millennium Development Goals (MDG) to reduce global poverty. The World Bank urged governments to strengthen safety nets for the poorest and ensure that nutrition was factored into the help given to poor households. More resources, better data and sound policy choices continue to be needed to end hunger for the worlds 870 million hungry people, the Bank said.

Otaviano Canuto, World Bank vice president for poverty reduction and economic management, also urged countries to boost investment in agriculture to increase food production, which would help reduce prices.

The World Bank and other lenders have raised financing for agriculture in developing countries, a sector that had long suffered from under investment. The 2008 food price and energy crisis, however, highlighted the need for more investment in food production. A swelling middle class in fast-growing emerging economies like China has added to rising demand for more food supplies.