First Quarterly Global Food Price Increase Since August 2012
Press Release, The World Bank Group
According to the latest edition of the World Bank’s quarterly, Food Price Watch Group (extract here1), food prices on international markets rose by 4% between January and April 2014, this was mainly due to growing concerns about climate conditions, the tension in Ukraine and rising demands for imports. The largest quarterly increases were wheat (18%) and maize (12%), despite ongoing expectations for a record cereal harvest and sturdier stocks in 2014 thanks to the outstanding crop year in 2013.
The World Bank reminds us, “Shocks on food prices can trigger and exacerbate conflicts and political instability, it is therefore necessary to promote policies that mitigate these effects. Proper monitoring is a first step in this direction” (consider the African continent, but also the Middle East). A first step, yes, but not enough to deal effectively with food insecurity...
Food crises are now a structural evil that pervades across all regions of the world. The lack of elasticity in supply over demand, when agricultural markets are structurally volatile and are not immune to sudden price reversals, prove once again that global food security is subject to both endogenous and exogenous risks that are impossible to predict.
If the crises of 2007/8 and 2010 led to the international community becoming aware of the risks associated with excessive food price volatility, these advances remain insufficient without adequate regulatory mechanisms. It is thus essential to move from a logic of emergency crises management to a real preventive approach with the implementation of regulatory measures which control hyper-volatility in agricultural prices.
momagri Editorial Board
International prices of food increased by 4 percent between January and April 2014, driven mainly by increasing weather concerns and import demand, according to the latest edition of Food Price Watch. This spike in prices puts an end to a downward trend sustained since August 2012.
International prices of wheat and maize saw the sharpest increases this quarter, of 18 percent and 12 percent, respectively. These increases took place despite continued projections of record grain harvests, stronger stocks expected in 2014, and 2013 bumper crops. Weather in the United States, global El Niño conditions, and the consequences of Ukraine tensions are issues to monitor in the coming months.
“Weather concerns, political uncertainties, and currency fluctuations do not exist in a vacuum—as evidenced by this quarter’s global food price increase” said Ana Revenga, Acting Vice-President for the Poverty Reduction and Economic Management Network of the World Bank Group. “Over the next few months, we must watch these prices carefully, making sure that any further increases do not put additional pressure on the least well-off around the world.”
Domestic prices remained mostly stable between January and April 2014, but saw typical fluctuations between countries. For example, monitored markets in Ukraine, Ethiopia, Sudan and Kyrgyzstan saw some of the largest wheat price increases, while in Argentina and Pakistan, prices decreased. Maize prices went up the most in countries such as Ukraine and Russia, but went down markedly in Mozambique. Rice prices increased in Myanmar and Somalia, but declined in Thailand and Cambodia.
According to Food Price Watch, internationally traded food prices in April 2014 remain 2 percent lower than in April 2013, and just 16 percent below their historical peak in August 2012.
Food Prices and Food Riots
The latest Food Price Watch discusses the role that food prices and food shortages may have on food riots, making the case for why monitoring food prices is important not only to food security and welfare, but also to political stability and security concerns. Dozens of violent episodes erupted across the world during the food price hikes of 2007 and 2008, and others have followed. Food price shocks can both spark and exacerbate conflict and political instability, and it is vital to promote policies that work to mitigate these effects. Adequate monitoring is the first step in that direction.
How the World Bank Group is helping
The World Bank Group is committed to boosting agriculture and agriculture-related investment. In 2013, new Bank Group commitments to agriculture and related sectors were $8.1 billion. For IBRD/IDA, assistance to agriculture and related sectors has risen from an average of nine percent of total lending in FY10-12, to 12 percent in FY13.
IFC made $4.4 billion in private sector investments across the food supply chain in FY13. These investments supported projects that promote access to finance, access to inputs like seeds, equipment and advice, and access to markets through infrastructure and food-processing facilities.
The WBG supports the Global Agriculture and Food Security Program (GAFSP). Nine countries and the Bill & Melinda Gates Foundation have pledged about $1.4 billion over 3 years, with $1.2 billion received.
Coordinating with UN agencies through the High-Level Task Force on the Global Food Security Crisis and with non-governmental organizations, and supporting the Partnership for Agricultural Market Information System (AMIS) to improve food market transparency.
Advocacy for more investment in agriculture research–including through the Consultative Group on International Agriculture Research (CGIAR) – and monitoring trade to identify potential food shortages.
Supporting improved nutrition among vulnerable groups: During the past decade (2003-2013), the International Development Association (IDA), the World Bank's fund for the poorest, has ensured that more than 210 million pregnant/lactating women, adolescent girls, and/or children under age five were reached by basic nutrition services. The Bank is also an active member of the Scaling Up Nutrition movement and supports the SecureNutrition Knowledge Platform, which aims to improve nutrition through agriculture investments.