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High food prices: World Bank warns against complacency

Nov 30, 2012

“A new norm of high prices seems to be consolidating,” said Otaviano Canuto, World Bank Group’s Vice President for Poverty Reduction and Economic Management.

The world cannot afford for high and volatile food prices to be the “new normal,” while millions of people continue to suffer from hunger and to die from malnutrition, the World Bank Group warned today.

According to the latest edition of the World Bank Group’s Food Price Watch report, published quarterly, global food prices stabilized following last July’s record peak. In October, prices were 5 percent below that peak. Prices were driven down by fats and oils, with more modest declines in grains. Seasonal increase in supplies, the absence of panic policies, such as food export restrictions, and better expectations for the future are behind such trends, although markets remain tight in general.

“A new norm of high prices seems to be consolidating,” said Otaviano Canuto, World Bank Group’s Vice President for Poverty Reduction and Economic Management. “The world cannot afford to be complacent to this trend while 870 million people still live in hunger and millions of children die every year from preventable diseases caused by malnutrition.”

Nonetheless, prices remain at high levels – 7 percent higher than a year ago. Grains, in particular, are expensive. They are 12 percent above their levels 12 months before and very close to the all-time high of 2008. Maize, for instance, is 17 percent higher than in October 2011 and 10 percent above the record-high prices of February 2011, despite their decrease of 3 percent between August and October.

“Although we haven’t seen a food crisis as the one of 2008, food security should remain a priority,” said Canuto. “We need additional efforts to strengthen nutrition programs, safety nets, and sustainable agriculture, especially when the right actions can bring about exceptional benefits.”

According to the UN Food and Agriculture Organization and others, 870 million people live with chronic undernourishment, an unchanged figure since 2007-09, and behind the necessary improvement to achieve the hunger Millennium Development Goal of halving the number of hungry people by 2015. Furthermore, child malnutrition accounts for more than a third of the mortality burden of children under the age of five, and malnutrition during pregnancy for more than 20 percent of maternal mortality.

Therefore, programs to improve nutrition, for instance, would multiply the benefits -- from improving cognitive development and learning; to contributing to the empowerment of women and maternal health; reducing the negative interaction of malnutrition and infectious diseases; and increasing economic growth.

According to Food Price Watch, weather will determine food prices in the near future, along with other factors, such as oil prices and the extent of emerging export competition – all of which remain uncertain at this point.

SOURCE: World Bank

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