World cannot afford for high and volatile food prices to be “new normal,”:World Bank
“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.
“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.”
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.
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.
How the World Bank is helping
In FY12, which ended June 30, new World Bank Group (WBG) commitments to agriculture and related sectors reached over $9 billion. This exceeded projected lending in the Bank’s Agriculture Action Plan, which foresaw an increase from an average of $4.1 billion annually in FY06-08 to $6.2-$8.3 bn annually in FY10-12. IBRD/IDA assistance in FY12 was the highest in 20 years.
•From July 2012 onwards the Bank’s emergency response to severe food price shocks in the poorest countries can draw on IDA16 resources, including those available through IDA’s Crisis Response Window (CRW), as well as undisbursed resources available under the recently approved Immediate Response Mechanism. For instance, in response to drought in the Horn of Africa, IDA is providing $1.8 billion, (including $250 million from the CRW), to save lives, improve social protection, and foster economic recovery and drought resilience.
•IFC has invested $1 billion in the Critical Commodities Finance Program, aimed to support trade in key agricultural and energy-related goods, to help reduce the risk of food and energy shortages, as well as improve food security for the world’s poorest.
Additionally, IFC’s Agricultural Price Risk Mechanism (APRM) enables protection from volatile food prices for farmers, food producers, and consumers in developing countries.
IFC’s Global Warehouse Finance Program allows famers to get needed financing quickly by borrowing against receipts they obtain for crop deliveries to warehouses.
The Bank is supporting the Global Agriculture and Food Security Program (GAFSP), set up by the WBG in April 2010 at G20’s request. Nine countries and the Gates Foundation have pledged about $1.3 billion, with $880.1 million received.
The Global Food Price Crisis Response Program (GFRP) has reached 66 million people in 49 countries - through $1.6 billion in emergency support.
The WBG is coordinating with UN agencies through the High-Level Task Force on the Global Food Security Crisis and with non-governmental organizations.
Supporting the Partnership for Agricultural Market Information System (AMIS) to improve food market transparency and help governments make informed responses to global food price spikes.
Advocacy for more investment in agriculture research–including through the Consultative Group on International Agriculture Research (CGIAR) – and monitoring agricultural trade to identify potential food shortages.
Supporting improved nutrition among vulnerable groups through community nutrition programs aimed at increasing use of health services and improving care giving. As part of its response to the food crisis, the Bank has supported the provision of some 2.3 million school meals every day to children in low income countries.
The Scaling Up Nutrition (SUN) framework for action to address under-nutrition was endorsed by over 100 partners, including the World Bank.
Improving global collaboration in the generation and sharing of knowledge between agriculture, food security, and nutrition, through the SecureNutrition knowledge platform: www.securenutritionplatform.org
India Infoline Research Team / 08:44, Jun 26, 2015
IIFL is hosting 10 companies at a Management Roadshow in Mumbai today. The opening is a subdued start. US market saw minor losses with Dow, S&P 500 and Nasdaq closing marginally lower.