World Bank sounds alarm on rising global food prices
World food prices rose in the first quarter of the year for the first time since their all-time high in August 2012, driven by rising demand in China, drought in the United States and unrest in Ukraine.
Washington: World food prices rose in the first quarter of the year for the first time since their all-time high in August 2012, driven by rising demand in China, drought in the United States and unrest in Ukraine.
According to the World Bank, internationally traded food prices increased by a sharp 4.0 percent. The leap was led by wheat and maize, up 18 percent and 12 percent, respectively.
As a result, international food prices in April were only 2.0 percent lower than a year ago and 16 percent below their record level in August 2012, the bank`s quarterly food price report said.
"Increasing weather concerns and import demand -- and, arguably, to a lesser extent, uncertainty associated with the Ukraine situation -- explain most of the price increases," the report said.
World Bank economists said prices increased despite bumper crops in 2013 and continued projections of record grain harvests and stronger stocks expected for 2014.
Persistently dry conditions in the United States and strong global demand, particularly from China, partly explained the price rises.But Ukraine, the breadbasket of eastern Europe, played a part, posting the largest domestic price increases for wheat and maize.
Ukraine, the world`s sixth-largest wheat exporter, saw domestic wheat prices jump by 37 percent, driven in part by currency depreciation.
Overall, international wheat prices soared by 18 percent quarter-over-quarter.
"Such a steep price increase had not occurred since the months leading to the historical peak in the summer of 2012," the report said.
International maize prices rose by 12 percent, with Ukraine, the third-largest exporter of maize, experiencing a 73 percent rise in domestic prices because of delayed plantings and increasing costs.
"Geopolitical tensions in Ukraine have not disrupted exports so far, but might have effects on future production and trade if uncertainty increases," the report said.
Other countries in the grip of political and economic stresses also saw prices shoot higher. In Argentina, for example, wheat prices were up 70 percent from a year ago.
Sugar prices rose 13 percent and soybean oil prices gained 6.0 percent quarter-over-quarter.
The first-quarter price increases were offset by a 12 percent decline in rice prices and a 7.0 percent drop in fertilizer prices.
The average price of crude oil rose 3.0 percent to $104 a barrel.
The United Nations reported last month that world food prices reached their highest level for 10 months in March due to poor weather in major producing countries and the crisis in Ukraine.
The UN Food and Agriculture Organization said its monthly food price index in March rose by 2.3 percent from February to the highest level since May last year.
Experts are concerned that rising prices will hurt the world`s most vulnerable and could foment food riots and other social unrest.
"Over the next few months, we must watch these prices carefully, making sure that any further increases do not put additional pressure on the least well-off around the world," senior World Bank official Ana Revenga said.
In 2007 and 2008, soaring food prices had sparked dozens of riots across the globe, including in Haiti, Cameroon and India.
According to the lender, 51 food riots have occurred in 37 countries since 2007, most of them linked to a jump in food prices and aimed at local authorities.
This was the case in the crises in Tunisia in 2011 and in South Africa in 2012, the bank said.
"Food price shocks can both spark and exacerbate conflict and political instability, and it is vital to promote policies that work to mitigate these effects," the report warned