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World Bank - Food Price Watch 2011
Category: Food | By RotaryGlobal, 12-Dec-2011 | Viewed 7203  Comments 0
211_658376216_4.jpgIn August 2011 the World Bank released a report on the status of commodity food prices covering different global markets. It shows food prices 33% higher than 12 months prior and close to 2008 levels. Perhaps ironically, those food commodity prices have risen drastically more in regions least able to cope with the change. The report starts out below:

"More than 12 million people are in urgent need of humanitarian assistance in the Horn of Africa as a result of a devastating drought, and conflict, civil unrest, and displacement in Somalia. The acute malnutrition rate in some areas of Somalia has exceeded 40 percent among children under five years of age. The disaster has hit the most vulnerable. In Somalia, out of 3.7 million people in crisis, 3.2 million are in urgent need, and 2.8 million of these people are in the south. Domestic food prices have been soaring in the region. Prices of the two major commodities, red sorghum and white maize, have increased by between 30 to 240 percent in Somalia.

"Global prices of food in July 2011 remain significantly higher than their levels in July 2010 and close to the 2008 peak levels, with the World Bank Food Price Index increasing by 33 percent in the last year. Prices for the period April to July 2011 have declined slightly from their peak in February, although prices remain volatile for specific commodities such as rice, maize, and wheat. Prospects for the overall supply of food have improved since April 2011, but several sources of uncertainty remain. Global stocks still remain alarmingly low. For example, the stocks-to-use ratio for maize currently stands at 13 percent, the lowest since the early 1970s. At these low stock levels, even small shortfalls in yields can have amplified effects on prices.

211_852617210_4.jpg"Domestic food prices continue to fluctuate widely. The annual price changes in maize in the 12 months up to June 2011 ranged from increases of more than 100 percent in Kampala (Uganda) to reductions of 19 percent in Port-au-Prince (Haiti) and Mexico City. Domestic prices of some staples have increased sharply in Central and South America and East Africa. For example, maize prices in the Dominican Republic and Colombia increased by 82 and 25 percent, respectively, between April and June 2011.

"Vulnerability to high food prices depends on a number of factors specific to each country and the impact can vary substantially among population groups within the same country. Therefore, an effective response needs to balance emergency interventions for the most vulnerable with longer-term initiatives, and differentiate between those who are at severe risk from those less affected. An integrated agricultural, food security, poverty, and climate agenda needs to be put in place. Managing long-term risks will also require monitoring prices of food regularly."

In an effort to understand the implications of this report, we asked Dr. Phoebe Albina Bwembya, a PhD in public health nutrition and Rotarian in Lusaka Zambia, for her insights.

211_162255340_4.jpgQ. Are the high food prices normal variations?

Yes and No, it depends on a number of factors e.g. the majority of people in war-torn countries live in fragile environments, perpetually experiencing recurrent droughts and unable to maintain economically viable livelihoods. 

Q. Why are the rises in prices worse in less developed countries?

Such countries tend to have
(1) High inflation
(2) Are net importers of staples (e.g. maize, wheat and rice)
(3) Limited mechanized farming — low productivity
(4) High burden of disease  (including under-nutrition), which affects productivity and limits investing in future livelihoods
(5) May also have weak monetary policies to support national development

Q. If the prices are so high for the foods used in the report, can't we simply eat other cheaper foods?

Yes and No. e.g. The way food is viewed and mannerisms associated with eating are influenced by different factors (inherent within a society or acquired).  Making decisions about what to eat is an individual choice, and many people react negatively to change. It takes time to provide the right education for people to appreciate why they should change their way of eating. 

Q. Why are those particular foods focused on and not others?

They have an international value attached to them. Shortages or fluctuations in staple prices can bring about instability in a country

Q. Why are food prices rising?

Many of the reasons are cited in the World Bank Paper (e.g. increased use of food commodities for bio-fuel, etc.), However, for developing countries, whose livelihoods are tied to agriculture, there is increasingly less attention being paid to research for sustainable livelihoods, conservations agriculture being promoted does not take into account the labour needs, limited farming equipment, infrastructure and marketing opportunities.. 

Q. What happened in 2008? Why did food prices rise so quickly and why did they fall so suddenly?

A sudden rise in food prices may occur due to a number of factors including natural calamities (such as floods, droughts, invasion of locusts) or man-made disasters (e.g. war, currency fluctuations, poor food policies, and low food stocks,).  Frequently, food may be imported into the country by external organizations without proper consultations with local governments or authorities with regard to how much and where such imports are required.  In countries that experience disasters, it is not uncommon to observe sharp food price fluctuations due to market distortions resulting from unplanned for imports.   In countries with inadequate monitoring systems, artificial food shortages may also result in sudden increased prices.

Q. Does the rising price of oil (the fossil fuel, not vegetable) affect the price of food?

Yes, especially when countries where oil is produced are under siege from external forces,

Q. Are there annual fluctuations in food prices from harvesting and planting periods?

Yes, at harvest time, there is plenty of food. During planting, people have fewer stocks. 

Q. Are food prices high in certain countries because those countries don't produce their own food?

Not necessarily. Some countries in Europe do not produce their own food but supported by other sectors (e.g. banking/financial institutions support their economies).

211_305715083_4.jpgQ. Why is meat not one of the foods tracked?

Staples are more important than meat. Staples provide the bulk of the required K-calories
Q. Aren't high food prices good for local economies and consequently good for global economies?

Yes, in specific situations. But frequently the developed world stands at an advantage. In complying with guidelines on food imports/exports, it is easier for the developed world to sell food to developing countries and not vise-versa.  In certain situations, developed countries also try to support their farmers by ensuring that part of aide brought to developing countries is in the form of agricultural products. Under some developmental programs, it is not uncommon for a cereal to be sold in the country that is receiving aide, and then the money raised is used for development work in the particular country.

Q. Is global food production otherwise normal?

Yes, but disparities in distribution do exist. Statistics demonstrate that food production has increased in comparison to forty years ago. It is frequently reported in the media that more and more people are experiencing health conditions attributed to over indulgence in food.  The media also keeps reminding us that the number of people carrying excess weight exceed those that are undernourished. It is therefore right to assume that there is sufficient food being produced, but the challenge is how to equitably distribute that food. 

Q. Is the World Bank a reliable source of information where food is concerned?

To some extent the World Bank is a reliable source of information on food.  The best source of information where food is concerned is National Statistics Offices.  Such offices have data on food available/produced as well as what is imported into or exported of the country. 

Q. Are food price the result of weakened economies or one of the causes?

Weakened economies are one of the causes that lead to higher food prices. But weakened economies have underlying factors such as, poor fiscal planning, weak financial policies/systems and heavy reliance on external support.

Dr. Bwembya has over 20 years experience working on different assignments for United Nations organizations, government, bilateral and multi-lateral institutions in the field of agriculture, food security, health and nutrition.

To read the complete report, click this link: http://rotaryglobal.net/docs/World-Bank-Food-Price-Watch-2011_140.pdf
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