Food prices push millions into poverty
Tuesday, February 15, 2011; 10:58 PM
Rising food prices pushed tens of millions of people into extreme poverty last year and are reaching "dangerous levels" in some countries, World Bank President Robert Zoellick said Tuesday as he released new data showing that the cost of grain and other staples is near a historic high.
The costs of some key commodities such as wheat have doubled in the past year, and a World Bank index of overall food costs rose 15 percent from October through January. The bank's food price index, which covers the costs of grain, sugar, food oils and other staples, is just 3 percent below its historic high in 2008 - a level that touched off food riots in several countries.
Zoellick urged major nations to collaborate on ways to temper the rapid price swings that can lead to shortages in the economically weakest nations and prompt others to stockpile grain or restrict exports.
"It's poor people who are now facing incredible pressure to feed themselves and their families," Zoellick said, noting that food inflation was "an aggravating factor" in the unrest that started in Tunisia and spread to Egypt and other countries.
According to the bank's data, rising food costs pushed an additional 44 million people below the threshold of extreme poverty, meaning they are surviving on the equivalent of $1.25 per day. It also threatens to undermine public budgets in places such as Albania and Tajikistan that rely heavily on imported food and have little ability to pay more.
Finance ministers from the Group of 20 economic powers meet in Paris this weekend and are expected to discuss ways to stabilize world food prices, in addition to continuing debate on currency issues and other global economic policies. The G-20 established in 2009 what was envisioned as a $20 billion fund to help the poorest countries cope with higher food costs and is now expected to focus on ways to make world food markets function better, a senior Treasury official said Tuesday.
Establishing ways to limit speculation and panic buying, as well as setting guidelines for the use of import and export controls, are among the steps that could be considered to prevent prices from rising too sharply, said the official, who spoke on the condition of anonymity in advance of the meetings.
Zoellick has floated similar ideas, saying that the focus of major nations should be "not to prosecute or block markets, but to use them better."
Wheat prices have been among the fastest moving, doubling between June and January as Russia restricted exports, Australia's crop was damaged by flooding and the size of China's upcoming winter crop was cast into doubt because of an ongoing drought.
The likelihood that political turbulence in the Middle East might prompt countries such as Egypt to increase their grain reserves is also pushing up the price of wheat and other grain futures on world commodity markets, the bank reported.
There are some bright spots: The rice harvest has been strong, and prices for that staple have increased more slowly than for other grains. In Africa, people have begun substituting local products such as sorghum and cassava for imported food, the World Bank said.
But in advance of the finance ministers' gathering, the bank report focused on the pressures that could build behind food inflation. Corn prices, for example, have jumped 73 percent, driven higher not just by demand for the crop as a food, but also for the production of biofuels. Rising affluence in countries such as China, in addition, can increase the demand for meat - and raise the price for grains used as feedstocks.