Food Prices Crisis/World Bank

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World Bank President Robert Zoellick warned of the threat posed by high and volatile food prices.

"Driven in part by higher fuel costs connected to events in the Middle East and North Africa, global food prices are 36 percent above their levels a year ago and remain volatile, pushing people deeper into poverty, according to new World Bank Group numbers released today (14 Apr).

World Bank President Robert Zoellick, addressed the press conference in Washington DC, saying that food prices are “an aggravating factor” in the Middle East and North Africa. He added that the newly released Food Price Watch, there has been “is double-digit food price inflation in Egypt and Syria.”

According to the latest edition of the Food Price Watch, a further 10 percent increase in global prices could drive an additional 10 million people below the $1.25 extreme poverty line. A 30 percent price hike could lead to 34 million more poor. This is in addition to the 44 million people who have been driven into poverty since last June as a result of the spikes. The World Bank estimates there are about 1.2 billion people living below the poverty line of US$1.25 a day.

Zoellick said “with food prices, we are at a real tipping point” adding that “food prices are six per cent above their levels a year ago and remains close to its 2008 peak.”

Key increases compared to a year ago include maize (74 percent), wheat (69 percent), soybeans (36 percent) and sugar (21 percent), although rice prices have been stable. In many countries, vegetables, meats, fruits and cooking oil continued to rise with potentially adverse nutritional consequences for the poor.

Food prices have soared due to severe weather events in key grain exporting countries, export restrictions, the increasing use for bio-fuel production, and low global stocks. The food price hike is also linked to surging fuel prices. Crude oil increased 21 percent in the first quarter of 2011as a result of unrest in the Middle East and North Africa.

On Tunisia, Zoellick said the World Bank will “work to support the authorities on a $500 million budget support operation that could leverage an additional $700 million from other donors.”

The reforms in the country with the support of the Bank are expected to “focus on freedom of association, access to information, and transparency in public procurement.”

In general, measures to reduce the impact of high food prices on the poor include targeting social assistance and nutritional programs to the poorest, removing grain export restrictions, and relaxing bio-fuel mandates when food prices exceed threshold levels.

Improving country capacity to manage volatility through financial market instruments, better weather forecasting, more investments in agriculture, the adoption of new technologies, such as rice fortification to make it more nutritious, and efforts to address climate change are also needed. "

Directors:

• Muhamed Sacirbey UNTV-World Bank

Producers:

• Susan Sacirbey