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Agriculture and Rural Development

Food Prices Are Soaring: 5 Questions for Economist José Cuesta

Karin Rives's picture

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Rice grains in bowl. Photo: Arne Hoel | The World Bank

Photo Credit: Arne Hoel/World Bank

The numbers are jarring: Global prices for key food staples such as corn and soybean were at an all-time high in July 2012, with corn rising 25 percent and soybeans 17 percent in a single month.

Globally, food prices jumped 7 percent between April and July. In some countries, people now pay more than twice as much for sorghum [1] as they did a year earlier, the latest issue of the World Bank’s Food Price Watch shows.

This is expected to hit certain regions with high food imports, such as the Middle East and much of Africa, especially hard.

We’re looking at a significant price shock, but does that mean we’re headed for a food crisis similar to the one we experienced in 2008? World Bank economist José Cuesta, the author of the quarterly Food Price Watch report, gives his perspective on the situation.

Re-thinking irrigation to fight hunger

Jonathan Kamkwalala's picture

Photo: Arne Hoel, The World BankFood prices are spiking globally and in Africa one way to ensure food security is to rethink the role of irrigation in agriculture and food production.

Achieving food security in Africa is a critical issue, even as efforts are stymied by drought, floods, pestilence and more. To these natural disasters, we can add the challenge of a changing climate that is predicted to hit Africa disproportionately hard.  

So, what can we do? World Water Week kicked off on Sunday in Stockholm and how water impacts food security will be the focus.

In the World Bank’s Africa Region, we are working on the belief that a proven way to expand agriculture and food production in Africa is to focus on scaling up irrigation programs, bringing water to parched lands, and strengthening the hands of farmers who produce food against climatic odds.

Welcome to World Water Week 2012

Jaehyang So's picture

Thousands of water development practitioners have begun to descend upon Stockholm for World Water Week, the annual knowledge-sharing event hosted by the Stockholm International Water Institute. It was raining earlier today in Sweden’s capital. But some parts of the world have suffered through unprecedented high temperatures and drought. The drought in the US can be seen from space, as described in this Wired magazine article. This drought has led to damages to, and drops in, yields of crops of maize and soybeans, for which the US is the largest exporter in the world. It has also meant higher food prices.

Alta do preço dos alimentos: chegou a hora de agir de acordo com o que se prega?

Marie Chantal Messier's picture

Also available in English, Español

Não se pode contestar que o alto preço dos alimentos está sendo muito prejudicial às famílias, às empresas e aos governos na América Latina por exacerbar os efeitos potencialmente catastróficos nos orçamentos das pessoas e da economia como um todo.

Rising food prices: time to put your money where your mouth is?

Marie Chantal Messier's picture

Also available in Portuguese, Español

There is no arguing that high food prices are taking a heavy toll on Latin America’s families, business and governments, fueling ripple effects on people’s budgets and the economy as a whole.

But behind the cold hard numbers of price increases, shrinking budgets and inflationary fears, the simple truth is high food prices can kill –or severely impair- people, especially kids from underprivileged environments.

América Latina: Deveria a febre global de preços dos alimentos nos dar calafrios?

Willem Janssen's picture

Also available in English, Español

Com a nova escalada de preços dos alimentos, a terceira em cinco anos, também aumenta a preocupação com a segurança alimentar global. Imediatamente, três perguntas vêm à mente: Por que isso está acontecendo? Como isso afeta a América Latina e o Caribe? O que podemos fazer a respeito disso?

Latin America: should global food price fever give us the shivers?

Willem Janssen's picture

Also available in Portuguese, Español

As food prices creep up again for the third time in five years, concerns about global food security are also on the rise. Right off the bat, three questions come to mind:  Why this is happening? How does this affect Latin America and the Caribbean? What should we do about it?

Prospects Weekly: Adverse weather conditions are leading to a surge in food commodity prices

Adverse weather conditions are pushing some food commodity prices to levels not seen since the 2007/08 price spike. Nonetheless, weakening global demand has pushed down headline inflation in most regions. Notwithstanding perturbations in the global economy, remittance flows to developing countries remain resilient and are forecast to rise by 7.2% in 2012.
Adverse weather conditions are leading to a surge in food commodity prices. Excessive heat in the US Midwest, drought in Central Asia, rains in Europe, and poor monsoon conditions in India are pushing some food commodity prices to levels not seen since the 2007/08 price spike. Futures prices at the Chicago Mercantile Exchange continued the rally that began in mid-June, with maize and wheat prices gaining 50% and 45%, respectively within a month. Maize and soybean prices have surpassed their 2007/08 peaks. On the positive side, the rice market remains well supplied, albeit at high prices. Separately, metals and some agricultural raw material prices continued to slide for a fourth consecutive month on concerns about global demand. Aluminum, copper, and lead prices declined 5.9%, 6.7%, and 7.9%, respectively in June—the metal price index is down 11% in the past three months and has lost one-quarter from its early 2011 peak.

 
Disinflationary trends prevail globally, although local factors are driving-up inflation in some regions. The weakening of global demand in recent months has dampened industrial commodity prices, including oil prices, thereby contributing to disinflationary pressures across regions. Headline inflation rates have fallen to 1.8% on aggregate among high-income countries in June from 2.5% at the beginning of the year, and in developing countries it has fallen to 5.7% from 6.6% in January. Nonetheless, significant differences remain among regions. While headline inflation trends in East Asia, Latin America, and Eastern Europe are consistent with global trends, idiosyncratic factors such as poor precipitation in India, and delayed harvest and droughts in Central Asia, and political unrest-related supply shortages in some Arab Spring countries have increased domestic food prices, thereby leading to an inching up of inflation.

 
Remittances forecast to rise in 2012 despite volatility in the global economy. Remittance flows to developing countries—an important source of income and external financing—are forecast to reach $399bn in 2012, up from $372bn in 2011. Notwithstanding perturbations in the global economy, remittance flows have remained resilient and are less volatile compared to capital flows. A recent World Bank study Migration and Remittances During the Global Financial Crisis and Beyond attributes the resilience of remittance flows to, inter alia, the persistence of migrant stocks in receiving countries and their willingness to absorb income shocks in order to continue remitting. The more diversified the destination of migrants and the lower the barriers to labor mobility in the destination countries, the more resilient and larger remittances to the country of origin were.

 

Download the Prospects Weekly as PDF here.

Longreads: Hope Withers With Harvest, More Fish More Money, Aging Workforces Drive Jobs to SE Asia, Mapping Toilets in Mumbai

Donna Barne's picture

Find a good longread on development? Tweet it to @worldbank with the hashtag #longreads.

 

Drought, food prices, and global warming remain hot topics as crops in the United States wilt under the hot sun, raising fears of another food price crisis. The Guardian chronicles the corn belt’s adverse conditions – and the implications for the rest of the world in “America’s Corn Farmers High and Dry as Hope Withers With Their Harvest.” (For a view from South Africa on the drought’s ripple effect, see Independent Online’s “US drought puts pressure on SA food prices”.) On another food supply issue, Co.exist highlights a new study on the costs and benefits of rebuilding global fisheries in “More Fish Means More Money.” The bottom line: rebuilding fisheries would begin to pay off in 12 years, the study says. The New York Times blog India Ink relates an effort to address another huge challenge—access to sanitation—in “Mapping Toilets in a Mumbai Slum Yields Unexpected Results.” Bloomberg looks at the coming demographic dividend in Southeast Asia, where young workers are expected to gain jobs as workforces age in Japan, Korea and China.

Land Law Advocacy for Farmers in China

XiaoHui Wu's picture

Photo Credit: Landesa.orgEven though Chinese law offers farmers protection from land grabs, readjustments, and other confiscations, news reports paint a different picture of embattled farmers defending their land from local officials working in concert with developers. In fact, every year 3-4 million farmers lose their property to land readjustments and other forms of compulsory forfeiture in China.

Many of these farmers do not know their legal rights. According to independent surveys, fewer than 30% of farmers have heard of China’s Property Law, the most important law governing properties, and land rights. As a result fewer than 10% of Chinese farmers ever appeal to administrative and judicial institutions when their land rights are violated.

Too little water, too many droughts

Kristina Nwazota's picture

Understanding Risk Forum 2012, Cape Town, South AfricaIt was gratifying this morning to sit in a room filled with disaster risk reduction and management experts from around the world to open the 2012 Understanding Risk Forum. The Forum focuses on  how countries and their development partners can work together to protect people and communities against the impacts of climate-related natural disasters.

In Sub Saharan Africa, these disasters range from floods caused by cyclones and rising sea levels in coastal countries like Mozambique and Madagascar, to droughts caused by too little rainfall in places like Mauritania, Mali, Chad, Burkina Faso and Niger in the Sahel and Somalia, Ethiopia, Eritrea and Sudan in the Horn. As the World Bank's Jonathan Kamkwalala said, many disasters are hydro-meteorological in nature, meaning too little water resulting in droughts or too much water resulting in floods. Volcanoes also are a concern in Africa, although many wouldn't know it. The Democratic Republic of Congo's Mount Nyiragongo is an active volcano, one that could erupt in the very near future.

Drugging Development

Otaviano Canuto's picture

Photo: Scott WallaceDrug trafficking is nothing new. But with the current levels of violence we are seeing, its effects on society and economic activity are staggering. From the suffering of victims, to increasing levels of corruption and the weakening of institutions, drug trafficking is not only a criminal problem—it is an urgent development issue which needs to be tackled.

The drug business is particularly insidious.

Bilan d’une semaine à Rio : du pain sur la planche pour lundi prochain

Rachel Kyte's picture

Nous nous sommes rendus à Rio+20, la Conférence des Nations Unies sur le développement durable, avec la ferme intention d’en repartir munis d’un plan concret, un plan également adressé aux ministres des finances, du développement et de l’environnement qui nous indiquerait les changements à opérer « dès le lundi matin prochain » en vue d’atteindre notre objectif d’un développement durable pour tous.

 

Ce plan, nous l’avons.

How a Week in Rio Leads to an Active Monday Morning

Rachel Kyte's picture

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What will you do Monday morning to start making a difference? UN Photo/Maria Elisa Franco

We came to Rio+20 determined that one outcome of the UN Conference on Sustainable Development must be a plan for what ministers of finance, development and environment and ourselves need to do differently Monday morning, June 25th  – if we are to achieve sustainable development for all. 

We have our plan.

We came to Rio+20 knowing that inclusive green growth is the pathway to sustainable development, and the evidence here is that this international community agrees. 

The analysis behind the World Bank’s report Inclusive Green Growth: The Pathway to Sustainable Development framed many of the conference debates and helped facilitate a new focus on natural capital accounting – a fundamental component of inclusive green growth.

According to the 59 countries, 86 companies, and 17 civil society organizations that supported the World Bank Group-facilitated 50:50 campaign – as well as many others – natural capital accounting is an idea whose time has come.   

In fact, natural capital accounting events filled the Rio Convention Center, and government and civil society groups alike highlighted the importance of moving beyond GDP.

This new energy and emphasis around this issue may be the most important outcome of Rio+ 20. 


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