World Bank Reports that Food Prices are Higher than Ever

A new report from the World Bank reveals that food prices are approaching the peak levels achieved in 2008. Global food stocks are on a decline, and since the population is going up, so goes demand, and prices along with them. The situation is further complicated by volatile oil prices which raise the cost of transporting food. All in all, food prices are a third higher than they were at this time last year. The price increase can have a life or death impact on the many millions of people that already live on the edge.

The World Bank found that staples such as wheat, soybean oil and sugar are respectively 55%, 47% and 62% more expensive than a year ago, while maize prices have shot up 84%, partly as a result of US demand for biofuels. The report says America's demand for maize for use in the production of ethanol grew 8% over the year, adding that "this trend may continue, given the prevailing uncertainties in the energy market."

Oil prices are currently 45% higher than July 2010 levels and the price of fertilizers has increased 67% over the same period. These two increases have pushed up food production costs. Somalia, which is currently in the grip of famine, saw maize prices rise over 100% and there are now more than 3.2 million people in urgent need of emergency food aid, the report states.

"Persistently high food prices and low food stocks indicate that we're still in the danger zone, with the most vulnerable people the least able to cope," said World Bank president Robert Zoellick. "Vigilance is vital given the uncertainties and volatility that exists today. There is no cushion."

The new Food Price Watch report echoes similar predictions from Oxfam which said that food prices could skyrocket by as much as 180% over the next 20 years. The World Bank has been pressurizing the G20 countries to take action on this growing crisis. If they could exempt humanitarian food aid from export bands and if they could pilot small regional emergency food reserves that could be used to replenish national safety nets, then the situation could be saved from getting worse.

Food and fuel have an intricate and complicated relationship leading to many complications and ultimately a vicious cycle. Conventional agricultural methods are extremely fuel, land and water intensive and becoming increasingly so. The depletion of fossil fuel resources has seen the increase in use of food grain as biofuel sources. The World Bank estimates that there has been an 83% increase in food prices due to growing of biofuels in the last 3 years. Using agricultural land to support the production of crops for biofuels should be condemned.

The developing world’s priority is to conserve agricultural land, curbing sale of agricultural land for housing and industrial development and reclamation of contaminated land. The World Bank figures that 33 million can face unrest from food shortages and we have already seen riots in parts of the world. UN Secretary General Ban Ki-Moon warned up to $20bn a year was needed to alleviate the crisis. Distribution channels should be re-assessed and made more effective so that starvation is prevented. There are people living on less than $2 a day and when food prices increase, they are horrendously affected so rich countries should bear in mind that their food wastage can feed people in poorer parts of the world.

Image Credit: Rice Plants. Akhila Vijayaraghavan ©