São Paulo – The crisis that plagues wealthy countries and increased supply have caused food prices to drop by 8% from September to December 2011. By the end of December, prices were 7% lower than in the same period of 2010, according to the “Food Price Watch” report issued by the World Bank this Tuesday (30th). In spite of the decline in late 2011, food prices were 24% higher in 2011 than in 2010, according to the quarterly survey.
According to the World Bank, “prospects for decline in 2012 food prices remain favorable, due to weaker consumer demand as a result of a sluggish global economy, expected declines in the price of energy and crude oil, and strong forecasts for 2012 food supplies.”
Still, according to the report, prices will remain volatile and may go up in case of either increased demand for biofuels, higher oil prices due to instability in producing countries, and even low stock-up levels of certain foods. The conclusions are similar to those in a report issued by the United Nations Food and Agriculture Organization (FAO) this month.
Changes in climate also threaten productivity, and therefore prices. “La Niña, for instance, has already made its presence felt in the Pacific Ocean and is expected to affect the growing season of maize and soybeans in Argentina and Brazil.”
Throughout 2011, the prices of staples such as maize, soy and wheat prevented the year-end declines from being even sharper. In addition to international pressure on the prices of these foods, the domestic markets in some countries caused the prices of some products to rocket. Such was the case, for instance, with the wheat price, which increased by 88% in Belarus and by 23% in Ethiopia from December 2010 to December 2011. During the period, the price of rice in Uganda rose by 81%, the price of maize went up by 117% in Kenya and by 106% in Mexico, and the price of sorghum increased by 28% in Ethiopia.
The World Bank’s vice president and head of the poverty reduction and economic management, Otaviano Canuto, stated that the “worst food price increases” may be over, but we “must remain vigilant.” “Prices of certain foods remain dangerously high in many countries, leaving millions of people at risk of malnutrition and hunger. Governments must step up to the plate and implement policies to help people cope,” he said.
The World Bank’s chief economist, José Cuesta, claimed that prices remain high in West and East Africa mostly due to bad weather and regional conflicts. “We must remain vigilant because high prices may have devastating nutritional consequences which bear repercussions on school performance, health status, cognitive development and on productivity,” he said.
*Translated by Gabriel Pomerancblum
