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Food prices jump will hit poor, World Bank warns

2012-08-31 05:26:19

Global food prices have leapt by 10% in the month of July, raising fears of

soaring prices for the planet's poorest, the World Bank has warned.

The bank said that a US heatwave and drought in parts of Eastern Europe were

partly to blame for the rising costs.

The price of key grains such as corn, wheat and soybean saw the most dramatic

increases, described by the World Bank president as "historic".

The bank warned countries importing grains will be particularly vulnerable.

From June to July this year, corn and wheat prices each rose by 25% while

soybean prices increased by 17%, the World Bank said. Only rice prices

decreased - by 4%.

In the United States, the most severe, widespread drought in half a century has

wreaked havoc on the corn and soybean crops while in Russia, Ukraine and

Kazakhstan, wheat crops have been badly damaged.

The World Bank said that the use of corn to produce ethanol biofuel - which

represents 40% of US corn production - was also a key factor in the sharp rise

in the US maize price.

Overall, the World Bank's Food Price Index - which tracks the price of

internationally traded food commodities - was six percent higher than in July

of last year, and one percent over its previous peak, in February 2011.

'Lifetime of perils'

The organisation is urging governments to bolster programmes to protect their

most vulnerable communities from the increase in the cost of food.

"We cannot allow these historic price hikes to turn into a lifetime of perils

as families take their children out of school and eat less nutritious food to

compensate for the high prices," World Bank President Jim Yong Kim said.

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This 'wait and see' attitude is unacceptable

Colin Roche Oxfam

Q&A: World food and fuel prices

He said countries in North and Sub-Saharan Africa and the Middle East were

among those most exposed to such price increases because much of their food was

imported and food bills make up a large proportion of average household

spending.

Already, the bank said, maize prices had increased by 113% over the past

quarter in Mozambique, while sorghum had risen 220% in South Sudan.

Although the bank said that it did not foresee the kind of price increases

which led to riots in many countries in 2008 there were, it said, other

potential risks which could push grain prices higher.

These included exporters pursuing panic policies, a severe El Nino,

disappointing Southern hemisphere crops and strong increases in energy prices.

The G20 group of leading economies has said it will not take any decision on

joint action until after the US agriculture department's September estimate of

this year's harvest.

But aid charity Oxfam said it was not acceptable for governments to delay

acting on food prices until the situation had deteriorated further.

"This 'wait and see' attitude is unacceptable," Colin Roche said.

"Oxfam is already seeing the devastating impact of food price volatility in

developing countries that rely on food imports."