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Global food prices increased by 8 percent from December 2011 to March 2012 due to higher oil prices, adverse weather conditions, and Asia’s strong demand for food imports, according to the World Bank Group’s latest Food Price Watch.
The World Bank’s Global Food Price Index was only one per cent below a year ago and 6 per cent below the February 2011 historic peak. If the current forecasts for increased food production do not materialise, global food prices could reach higher levels, underscoring the need to remain very vigilant.
“After four months of consecutive price declines, food prices are on the rise again threatening the food security of millions of people,” said Otaviano Canuto, World Bank Vice President for Poverty Reduction and Economic Management (PREM). Putting food first must remain a priority for the international community and in our work in developing countries.”
According to the quarterly Food Price Watch report, prices of all key staples increased between last December and March of this year, except for rice, due to both abundant supply and strong competition among exporters. Maize prices increased by 9 per cent, soybean oil by 7 per cent, wheat by 6 per cent, and sugar by 5 per cent. Crude oil prices rose by 13 per cent.
In addition, domestic food prices remain high, especially in Africa as the result of a combination of large food imports and local factors, such as trade restrictions between neighbors, hoarding, civil unrest, high fuel transportation costs and bad weather conditions.
In a global context, domestic food price increases have been larger than price declines across countries. Wheat prices from March 2011 to March 2012 rose 92 per cent in Belarus, while the price of maize increased by 82 per cent in Malawi, 80 per cent in Ethiopia, and 71 per cent in Mexico.
Production outlooks remain strong for 2012/13 and a number of factors have kept pressures on prices at bay. Record prices in late 2010 and early 2011 led to increased production of major crops worldwide, and are a key factor in the strong projections for the 2012/13 season.
The slowdown in maize use for ethanol production in the U.S. and weak global demand due to the euro crisis are contributing to keeping upward price pressures on check.
In response to drought in the Horn of Africa, the World Bank Group is providing $1.8 billion to save lives, improve social protection, and foster economic recovery and drought resilience.
A first-of-its-kind risk management product, provided by the International Finance Corporation (IFC), will enable protection from volatile food prices for farmers, food producers, and consumers in developing countries.
