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Global Food Prices Up By An Average Of 36 Percent
Pretium Ventures Report: Food shortages are becoming a major international concern, and the World Bank has encouraged food producing countries to ease export controls and divert supplies away from bio fuel production.
In February, around 40,000 gathered in Delhi to protest against the prices of pulses, milk, wheat, rice and vegetables, which have gone up sharply. Asian countries have been struggling to cope as the cost of rice has reached record levels; the staple for an entire continent has alone experienced a 70% increase over the past year. Shortages have even begun to hit importing countries, as exporting countries are faced with shortages of their own. The rise in rice prices is attributed to poor harvests due to extreme weather, increasing demand of imports, hoarding caused by expectation of increased price rises and a lack of long-term agricultural investment. Producers have restricted exports as they try to protect their stocks and limit inflation, while importers have been hit hard. The ADB study finds that that fast and persistent increases in the cost of many Asian food staples since the middle of last year —with the price of crude oil surging to a 31-month high in March, are a serious setback for the region, which has rebounded rapidly and strongly from the global economic crisis.
This, of course, is part of the general surge in food costs worldwide. As a result, countries are not able to find viable substitutes. Severe weather in some of the world's biggest food exporting countries damaged supplies, with floods hitting Australia and Canada in 2010. Drought and fires devastated harvests of wheat and other grains in Russia and the surrounding region during the summer, prompting Russia to ban exports. According to US government estimates, wheat production is expected to be lower this year than in the last two years. Sugar production has failed to keep up with the growing demand coming from developing countries, pushing prices sharply higher. In Central America, lack of rain has damaged bean crops and caused the biggest individual price rises. In Honduras and El Salvador, the price of red beans, part of the staple diet in the region, has almost trebled in the past year.
The World Bank suggests encouraging food-producing countries to ease export controls, and to divert production away from biofuels production when food prices exceed certain limits. It also recommends targeting social assistance and nutritional programs to the poorest, better weather forecasting, more investments in agriculture, the adoption of new technologies and efforts to address climate change. Financial measures are also needed to prevent poor countries being subject to food price volatility.
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