Report warns increased volatility linked to oil prices and declining stocks are putting millions at risk of famine
By BusinessGreen staff
Food prices are a third higher than this time last year and more upward pressure on prices is expected as a result of increasingly volatile oil prices and greater demand for biofuels.
That is the conclusion of a major new report from the World Bank that warns prices are approaching the peak levels achieved in 2008 as global food stocks continue to decline, threatening millions of the most vulnerable people across the globe.
The report found that staples such as wheat, soybean oil and sugar are respectively 55 per cent, 47 per cent and 62 per cent more expensive than a year ago, while maize prices have shot up 84 per cent, 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 eight per cent over the year, adding that “this trend may continue, given the prevailing uncertainties in the energy market”.
It also noted that despite a recent softening of oil prices, they are still currently 45 per cent higher than July 2010 levels, pushing up food production costs and the price of fertilizers, which increased by 67 per cent over the same period.
The report added that there has been a modest dip in food prices since February’s record levels, but prices of some commodities remained highly volatile: maize and wheat prices, for example, declined in June and then increased in the first half of July, while the price of rice fell from February to May, but has since increased.
Somalia, which is currently in the grip of famine, saw maize prices rise over 100 per cent 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 follows recent predictions from Oxfam that food prices could skyrocket by as much as 180 per cent over the next 20 years.
The World Bank has been pushing for the G20 countries to address the growing crisis and build on agreements reached in June to exempt humanitarian food aid from export bans and to pilot small regional emergency food reserves that could be used to replenish national safety nets.
However, the G20 heads of state are not due to meet to discuss the issue of food security until November.
(Source: www.businessgreen.com )