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New Norm High Food Costs Boost Supply Risk as World Hunger Grows

Nov. 29 (Bloomberg) -- High and volatile global food prices have become the “new norm,” creating increased risk for supplies at a time when 12 percent of the population remains chronically undernourished, the World Bank said.

Even after the World Bank’s food-price index slipped from a record in July, the measure was still 7 percent higher in October than a year earlier, the Washington-based lender said today in a report. While costs have dropped in recent months, fats and oils still are 12 percent more expensive than a year earlier, and grains are “very close” to the all-time high reached in 2008, the bank said.

“A new norm of high prices seems to be consolidating,” Otaviano Canuto, the World Bank Group’s vice president for poverty reduction and economic management, said in an e-mailed statement. “Although we haven’t seen a food crisis as the one of 2008, food security should remain a priority.”

Weather will play a large role in determining food prices in the near future, along with the cost of fuel and export competition, the bank said.

About 870 million people live in chronic undernourishment, the United Nations Food and Agriculture Organization estimates. The world population will rise to 7.02 billion this year, according to the U.S. Census Bureau. Also, malnutrition accounts for more than one-third of mortality of children under 5 years old and is responsible for more than 20 percent of maternal mortality, according to the World Bank report.

“The world cannot afford to get used to or be complacent” about high food costs, Canuto said. The World Bank Group committed more than $9 billion to agriculture and related sectors in the year ended June 30, the bank said.

To contact the reporter on this story: Elizabeth Campbell in Chicago at ecampbell14@bloomberg.net

To contact the editor responsible for this story: Steve Stroth at sstroth@bloomberg.net

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