Food Surge Is Exacerbating Poverty, World Bank Says

World Bank President Robert Zoellick
Robert Zoellick, World Bank president. Photographer: Tomohiro Ohsumi/Bloomberg

Global food prices have surged to dangerous levels, pushing 44 million more people into extreme poverty since June, according to the World Bank, which warned some nations may make the mistake of imposing curbs on shipments.

“The price hike is already pushing millions of people into poverty and putting stress on the most vulnerable, who spend more than half of their income on food,” President Robert Zoellick said yesterday. During the 2008 food crisis, the bank said 100 million may be driven deeper into poverty. The bank defines “extreme poverty” as living on less than $1.25 a day.

The bank’s food-price index rose 15 percent between October and January, led by wheat, sugar and edible oil. The gauge is 3 percent below a 2008 peak, when surging costs sparked riots in more than a dozen countries. The outlook for rice, staple for half the world, “appears stable,” the bank said in a statement.

“Food security across the Middle East region has become more of a prominent issue,” Tom Puddy, head of grain marketing at Perth, Australia-based exporter CBH Group, said today. Governments “are looking to try and secure food stocks to curb rising inflation and food prices to prevent any civil unrest.”

Surging food costs contributed to protests in Tunisia that ousted President Zine El Abidine Ben Ali in January. Egypt’s Hosni Mubarak resigned as president on Feb. 11 following more than two weeks of unrest.

Corn has surged 86 percent in the past year, and wheat is up 69 percent after drought and floods damaged crops from Russia to Argentina. The Food & Agriculture Organization’s World Food Price Index gained to a record in January for a second month.

‘Dangerous Levels’

“Global food prices are rising to dangerous levels and threaten tens of millions of poor people,” Zoellick said, commenting in the statement and a conference call. “If we don’t get a relief on the weather side, then I foresee conditions getting worse, and mistaken policy actions such as exports bans or other tax or price controls will exacerbate the problems.”

Trade curbs were a feature of the 2008 spike in food prices, when India and Vietnam were among nations that restricted or suspended shipments. Russia banned wheat exports last year after drought hit its harvest. Russian Agriculture Minister Yelena Skrynnik said yesterday that the government may decide whether to extend or lift the ban after crops are reaped, or in October.

Thailand, the world’s largest rice exporter, has no plans “for the moment” to curb shipments as the nation has abundant reserves to ensure food security, Prime Minister Abhisit Vejjajiva said in an interview last month. “We should all continue to benefit from the world market,” Abhisit said.

‘Good Harvests’

Unlike in 2008, rice prices have made more moderate gains and “good harvests in many African countries” have “prevented even more falling into poverty,” said the Washington-based World Bank, which defines its mission as fighting global poverty.

While rough-rice futures traded in Chicago have gained about 53 percent since the end of June, they remain below the record $25.07 per 100 pounds reached in April 2008.

“It is important to ensure that further increases in poverty are curtailed by taking measures that calm jittery markets and by scaling up safety net and nutritional programs,” the bank said.

Group-of-20 finance ministers and central bankers meeting this week should make food a priority, Zoellick said. The G-20 should sponsor a code of conduct on exports bans, better information on inventories and long-range weather forecasts.

As food costs gain, consumers even in developed nations are using more of their income to pay for food, Caroline Spelman, the U.K. secretary of state for environment, food and rural affairs, said at a conference yesterday. “In poor countries we’ve seen the cost of bread can spark riots.”

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