Wednesday, October 28, 2009

A new World Bank report on food prices

A new report issued by the World Bank examines food prices across the globe. The bank says that food prices are rising and are close to returning to the high prices seen in 2008 that triggered riots around the globe.

From this monitor article that we found at All Africa, writer Martin Luther Oketch describes the report's details.

"Future prices are expected to remain higher than in the 1990s and are likely to be more volatile. Higher price volatility may dampen supply response to higher average prices, negatively impacting both poor producers and consumers. In addition, the financial crisis has slowed down both growth and trade," the World Bank report reads in part.

The World Bank explains that global food prices more than doubled from 2006 to mid-2008, and then declined by 30 - 40 per cent through to the end of May 2009 before beginning to rise again.

In Uganda, for instance, food prices have been rising since the first quarter of 2008 to-date. Last Month, Uganda Bureau of Statistics said the annual food crops inflation rate for the year ending September 2009 went up to 49.5 per cent from 31.9 per cent in August, placing the blame on reduced supply and high demand for Uganda's food stuffs from the neighbouring countries thus pushing Uganda's inflation to 14.5 per cent.

The changing global context adds new urgency. Sudden increases in food prices in 2008 drove an estimated 100 million more people into poverty. Some 800 million people in the world were malnourished even before the food and economic crisis hit.

The World Bank points out that the seasonal nature of agriculture resulted in a lagged production response. Other than seasonal nature, the World Bank also singles out lower remittances and migration back to rural areas which have lowered purchasing power and pressured household budgets. "Resultant declines in government revenue have curbed the ability of governments to respond," the report reads in part.

Global poverty and hunger were steadily declining prior to the onset of the food crisis in 2007. The number of people suffering from hunger and poverty is now estimated by the United Nation's Food and Agricultural Organization to exceed one billion.

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