World Bank Promises Action To Counter Rising Food Prices

The World Bank is ready to help governments cope with global food price volatility, said its President Jim Yong Kim on Monday, after grain prices had rose dramatically in June following adverse weather conditions around the globe.

According to the bank, global wheat prices were now 50 percent higher than they were in mid-June, while the price of corn and soybeans had also increased by 45 percent and 30 percent respectively.

The World Bank is ready to help governments cope with global food price volatility, said its President Jim Yong Kim on Monday, after grain prices had rose dramatically in June following adverse weather conditions around the globe.

According to the bank, global wheat prices were now 50 percent higher than they were in mid-June, while the price of corn and soybeans had also increased by 45 percent and 30 percent respectively.

The bank blamed a severe drought in the U.S. – coupled with dry conditions in Russia, Ukraine and Kazakhstan and a below average start to the Indian monsoon season – for the sharp increase; and said that it was willing to “help governments put policies in place” so that impoverished people would not be too harshly affected by the sudden price surge.

[quote]“When food prices rise sharply, families cope by pulling their kids out of school and eating cheaper, less nutritious food, which can have catastrophic life-long effects on the social, physical, and mental well being of millions of young people,” said bank President Kim in a press statement published on the bank’s website. [/quote]

“The World Bank and our partners are monitoring this situation closely so we can help governments put policies in place to help people better cope,” he added.

Kim, a public health expert who was elected barely two months ago, suggested that “in the short-term, measures such as school feeding programs, conditional cash transfers, and food-for-work programs can help to ease pressure on the poor.”

“In the medium- to long-term, the world needs strong and stable policies and sustained investments in agriculture in poor countries.  We cannot allow short-term food-price spikes to have damaging long-term consequences for the world’s most poor and vulnerable,” he said.           

But despite any possible intervention, the bank cautioned that the world can still expect to see volatile, higher than average grain prices until 2015 at least.

“As recently as early June, analysts had expected price declines after the new harvests, not spikes,” the Bank wrote. “There had been early planting of corn and some soybeans in the United States, and the disastrous drought was unpredictable at that stage.” 

[quote]“Price increases will affect not only bread and processed food, but also animal feed and ultimately the price of the meat,” the bank added.[/quote]

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In an interview with Reuters, Marc Sadler, head of agriculture risk management at the World Bank, also warned that the current food price crisis would be “more complicated” than the crisis of 2008, when a sharp increase in rice and wheat prices caused riots in some countries and raised questions about the use of crops to make bio-fuels.

“The difference now is, if you look across the board, all prices are up,” making it tougher for farmers to decide how to allocate their acreage, Sadler said.

[quote]“When corn prices are up, bean prices are up and wheat prices are up, which one, as a farmer, do you go for?” he added.[/quote]