World Bank warns of soaring food price dangers

MANILA, Philippines – The rise in food prices to “dangerous levels” could increase the ranks of the poor in lower-income and middle-income countries, such as the Philippines, the World Bank (WB) warned on Wednesday.

The World Bank noted that rising food prices have driven an estimated 44 million people into poverty in developing countries since last June as food costs continue to rise near 2008 levels.

“Global food prices are rising to dangerous levels and threaten tens of millions of poor people around the world. The price hike is already pushing millions of people into poverty, and putting stress on the most vulnerable, who spend more than half of their income on food,” said WB Group president Robert Zoellick.

In its latest edition of Food Price Watch, the World Bank’s food-price index rose by 15% between October 2010 and January 2011. The index is 29% above its level a year earlier, and is only 3% below its 2008 peak.

According to the World Bank’s food-price index, global wheat prices have risen the most, doubling between June 2010 and January 2011. Corn prices increased by 73% while rice prices increased at a slower rate than other grains.

The relatively stable price of rice, the World Bank noted, is due to the decision of the Philippines to limit imports and the release of large stocks onto the market by Thailand.

The Philippines—categorized by the bank as a “lower-middle income economy”—is considered the largest importer of rice in the world.

The commitments of large exporters not to impose export restrictions, the WB said, would help maintain the stability of international rice prices. Currently, the average international price of rice is 70% below the peak reached during the 2008 crisis.

On February 3 the United Nations Food and Agriculture Office (FAO) disclosed that world food prices surged to a “new historic peak” in January for the seventh consecutive month.

The FAO noted that its food-price index averaged 231 points in January and was up 3.4% from December 2010.

“This is the highest level [both in real and nominal terms] since the FAO started measuring food prices in 1990. Prices of all monitored commodity groups registered strong gains in January, except for meat, which remain unchanged,” the FAO said in a statement.

FAO economist and grains expert Abdolreza Abbassian noted that the food index showed an upward pressure on world food prices, a pressure that will not ease anytime soon.

“These high prices are likely to persist in the months to come. High food prices are of major concern, especially for low-income food-deficit countries that may face problems in financing food imports and for poor households which spend a large share of their income on food,” said Abbassian. –Jennifer A. Ng, Business Mirror