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World

Food Price Watch April 2011

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Global food prices remain high, partly due to increasing fuel prices, and the World Bank’s Food Price Index is around its 2008 peak. Since June 2010, an additional 44 million people fell below the $1.25 poverty line as a result of higher food prices. Simulations show that a further 10% increase in the Food Price Index could lead to 10 million people falling into poverty, and a 30% increase could increase poverty by 34 million people. Low-income and lower-middle-income countries are experiencing on average 5% points higher food price inflation compared to better-off countries. A special focus on the Middle East and North Africa region in this issue shows double-digit food price inflation in Iran, Egypt and Syria, with more moderate levels in other parts of the region. Global maize prices are 17% higher in the first quarter of 2011 compared to the last quarter of 2010, due to increasing demand for industrial uses and low stocks. Several countries in Sub-Saharan Africa have faced double-digit increases in maize prices during the first quarter of 2011. A comparison of price changes within countries shows that price spikes, and therefore poverty impacts, can be highly localized. Immediate actions include targeting social assistance and nutritional programs to the poorest in areas where food prices have spiked. Macro-policy measures need to be informed by the extent that commodity price increases are feeding into inflationary expectations; net commodity importers need to monitor external sector vulnerability. Policy actions that will reduce the pressures on tight global food markets include relaxing biofuel mandates when food prices exceed a threshold level and removing export restrictions on grains. Investments in increasing agricultural yields in an environmentally sustainable manner, efficiency gains in food import supply chains, and greater use of risk-management tools such as hedging products are examples of medium-term policy goals to improve food security.