19 August 2011

Food Prices Still Very High; Not Only Famine Culprit

It looks like global food prices remain quite high. The latest food-price index from the World Bank is concerning in light of the current Horn of Africa famine. Bloomberg reports:
The bank’s food-price index was 33 percent higher in July than a year earlier, with maize, sugar and wheat contributing to the increase, the Washington-based lender said today. While prospects for food supply have improved, low stocks and expected volatility in some commodity prices, such as oil, may boost prices in coming months, it added.

“Persistently high food prices and low food stocks indicate that we’re still in the danger zone, with the most vulnerable people the least able to cope,” World Bank President Robert Zoellick said in an e-mailed statement. “Vigilance is vital given the uncertainties and volatility that exists today. There is no cushion.”

...In Somalia, prices of locally produced cereals have exceeded their 2008 peaks, the Food Price Watch report said, with red sorghum 30 percent to 240 percent higher. Prices of imported commodities such as rice and sugar are also higher than a year ago, it said.

Nonetheless, the bank’s average food price index for the three months through July was about 5 percent below its February peak, with wheat prices declining after good winter yields in Europe and the U.S. and the end of a Russian export ban, the bank said.

On the subject of the famine and food prices, one important fact to highlight is that "increases in the price of key staples have not been consistently higher in the famine declared areas than in the nonfamine area." As has been pointed out before, the factors leading to the present famine are complex and include the drought, the lack of government, the role of al-Shabaab and others. Be on the lookout for reports that will try to directly tie food prices to the famine.

Hopefully more knowledgeable people like Calestous Juma and Marc Bellemare will chime in on the role of food prices and agriculture.  In the meantime, do read the report from the World Bank as it provides a lot of information about present trends and what trends to watch.