The World Bank has warned that high and volatile food prices were becoming the biggest threat to the poor around the world.
World Bank Group President Robert Zoellick told a press conference in Washington: “We may be coming out of one crisis - the financial and economic crisis - but we are facing new risks and wrenching challenges; high and volatile food prices; high fuel prices with knock-on effects for food and, through food for stability; political upheaval in the Middle East and North Africa; turmoil in Cote d'Ivoire; repeated natural disasters; rising inflation in emerging markets with some risks of overheating; sovereign debt issues in Europe.”
Zoellick added: “I want to address the biggest threat to the poor around the world: high and volatile food prices----You are all aware of the ingredients: high food inflation, mix in price gyrations, and then stir higher fuel costs, and you get a toxic brew of real pain contributing to social unrest.”
He said food prices were not the cause of the crises in the Middle East and North Africa, but they are an aggravating factor.
“Our latest Food Price Watch shows that there is double-digit food price inflation in Egypt and Syria. It shows that commodity price spikes particularly hurt poor countries,” he said.
According to the latest edition of the World Bank’s Food Price Watch, a further 10 percent increase in global prices could drive an additional 10 million people below the USD1.25 extreme poverty line.
The document said a 30 percent price hike could lead to 34 million more poor. This is in addition to the 44 million people who have been driven into poverty since last June as a result of the spikes.
The World Bank estimates there are about 1.2 billion people living below the poverty line of USD1.25 a day.
The World Bank’s food price index, which measures global prices, is 36 percent above its level a year earlier and remains close to its 2008 peak. Key increases compared to a year ago include maize (74 percent), wheat (69 percent), soybeans (36 percent) and sugar (21 percent). Rice prices have remained stable.
In many countries, vegetables, meat, fruits and cooking oil continued to rise with potentially adverse nutritional consequences for the poor, according to the index.
Food prices have soared due to severe weather in key grain exporting countries, export restrictions, the increasing use for biofuel production, and low global stocks. The food price hike is also linked to surging fuel prices – crude oil increased 21 percent in the first quarter of 2011as a result of unrest in the Middle East and North Africa.
According to Food Price Watch, poorer countries have experienced greater food inflation than higher income economies. In the Kyrgyz Republic, for instance, where the poorest 10 percent of the population spends 73 percent of their budget on food, food price inflation in 2010 was 27 percent. As a result, the number of people living below the poverty line could increase by 11 percentage points.
The WB said measures to reduce the impact of high food prices on the poor include targeting social assistance and nutritional programmes to the poorest, removing grain export restrictions, and relaxing biofuel mandates when food prices exceed threshold levels.
Improving country capacity to manage volatility through financial market instruments, better weather forecasting, more investments in agriculture, the adoption of new technologies, such as rice fortification to make it more nutritious, and efforts to address climate change are also needed.
It said in short term through its Global Food Crisis Response Programme (GFRP), the bank helps some 40 million people in need through USD1.5 bn in support. Already, more than 40 low income countries are receiving, or will receive, assistance through new and improved seeds, irrigation, and other farm support and food assistance for the most vulnerable people.
“For the longer-term, the World Bank Group is boosting its spending on agriculture to some USD7 bn a year from USD4.1bn in 2008,” it said.