Global food prices have hit “dangerous levels” that may well play a part in political instability, push millions of people into poverty and raise the cost of groceries, according to a new report from the World Bank.
The report says global food prices have jumped 29% in the past year, and are just 3% beneath the record peak reached in 2008. “Food prices are the key and major challenge facing many developing countries today,” bank president Zoellick said. The World Bank says that elevated prices for corn, wheat and oil have pushed 44 million people into severe poverty since last June.
Zoellick said he’s concerned that certain countries might respond to food inflation by banning exports or implementing price controls, which would just exacerbate the problem.
The World Bank’s food price index rose by 15% between October and January alone. The increase has been driven by unpredictable global trading in wheat, corn and soybeans. Global corn futures more than doubled since last summer, from $3.50 to $7 a bushel, in part because of higher demand from developing countries and a growing bio-fuels industry.
Prices are rising in part because global grain traders have gotten stressed out about traditionally low reserve levels of corn, wheat and soybeans, said Chris Nagel, an analyst with Northstar Commodity in Minneapolis. Growing demand from customers in China and elsewhere is putting pressure on the supply of nearly all commodities, he said.
The slender reserves indicate traders will likely bid up crop prices further at any weather event that reduces next year’s planting. “We need to get good crops, all around the world, in all of these commodities,” Nagel said. “You just don’t have much foot room for error.” So it’s down to prayer then!
Rod millington
chief editor
