High food prices appear to be the new normal, as are wild fluctuations in prices. The world ducked a global food crisis after some key staples such as maize and soybean soared to record levels in July 2012, but food security concerns have not dissipated. The latest issue of the World Bank’s Food Price Watch shows that while the October Food Price Index dropped 5 percent below its July peak, internationally traded foods such as grains and oils are still well above price levels a year ago.
World Bank economist José Cuesta, author of the quarterly Food Price Watch, says this is not the time for the world to become complacent about high and volatile food prices. We need more action to help the 870 million people who are hungry, and the many millions more who live under a constant threat of hunger, he says.
1. Food prices have stabilized and even dropped lately. So why are we still concerned?
Prices of internationally traded foods stabilized in August and September and they even declined by 4 percent in October. Still, prices remain very close to their historical peaks.
We’ve also seen some mixed trends as of late. Export prices of grains, for example, increased in the last quarter for maize and wheat, while prices for rice were mixed, depending on origin.
So we must stay vigilant about these recent price trends and not lose our focus. Millions of people worldwide still struggle to feed themselves and their families because they lack effective mechanisms to cope with high food prices.
2. What foods and geographic areas are most affected by continued high prices on food?
We’ve seen a growing pressure on the domestic prices of key staples in Southern Africa, Eastern Europe and Central Asia as a result of seasonal factors and severe drought, respectively. Prices in South and East Asia, Western and Eastern Africa, and Central America are stable, but typically high – mainly as a result of seasonal conditions.
As always, there is a host of factors playing into these trends, such as a depreciation of the local currency, increasing fuel prices or security issues, in addition to weather conditions, to mention just a few.
3. Are high food prices the new normal for the world? Are they here to stay?
There is a growing consensus that international prices of food are high, at least in nominal terms. They also seem to be increasingly volatile if you consider how often we’ve witnessed price hikes over the past six years. Clearly, most of us are now acknowledging what some realized a long time ago: High food prices and food insecurity are not an anomaly. So, the important message is that no matter what happens with food prices from one month to the other, we cannot afford to let our guard down.
4. Why, in your opinion, should food security be a top priority on the global agenda?
The first and foremost reason is that we still have 870 million hungry people in the world, according to data from the United Nation’s Food and Agriculture Organization. Unlike the progress we’ve made on reducing extreme poverty, improvements in the reduction of hunger have been more modest. In fact, we’re still far from achieving the global hunger Millennium Development Goal by 2015.
There is some good news to report, for sure. Investments in food security, more specifically in nutrition-bundled interventions, rank among the most cost-beneficial development strategies. These interventions have not just a critical effect on nutrition, but also on cognitive development, on child and maternal health, on prevention of diseases and even on economic growth.
Last but not least, we know that doing little too late have unacceptable consequences for otherwise preventable child mortality.
5. Do you see policy makers and development organizations reacting to high food prices as they should?
We must separate reacting from preventing. Reacting is only part of the equation. We see more efforts to mitigate the effects of food crises globally and within countries, for example as governments work to implement or strengthen safety nets. But more needs to be done. We need stronger commitments to confront high food prices and, more broadly, food insecurity.
Investments in agriculture, which are key to a steady and sustainable supply for a growing population, have ramped up globally and especially in Africa. Yet again, more needs to be done to provide more resources, better and more transparent information, and to make sure policy makers and the development community avoid bad policies.