The World Bank stood ready to help governments respond to a broad-based run-up in grain prices that has again put the world’s poorest people at risk and could have lingering detrimental impacts for years. World Bank Group President Jim Yong Kim stated World Bank cannot allow short-term food-price spikes to have damaging long-term consequences for the world’s most poor and vulnerable. The World Bank and their partners are monitoring this situation closely so they can help governments put policies in place to help people better cope, Kim said.
A severe drought in the US Midwest has cut projected grain yields dramatically, reviving memories of 2008 when a sharp increase in food prices caused riots in some countries and raised questions about the use of crops to make biofuels.
Wheat prices have jumped more than 50 percent and corn prices more than 45 percent since mid-June, with dry conditions in Russia, Ukraine and Kazakhstan,excessively wet weather in Europe and a below average start to the Indian monsoon season adding to global crop worries. Prices for soybeans, a critical food and animal feed crop, also have risen almost 30 percent over the past two monts and nearly 60 percent since the end of last year.
When food prices rise, 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. Kim said the bank has number of programs to help governments should the situation worsen. Those include policy advice, increased agriculture and agriculture-related investment, fast-track financing, risk management products and work with the United Nations and private voluntary groups to help governments make more informed responses to global food price spikes.
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.
World Bank officials stressed there is no indication, based on current crop forecasts, of any major grain shortages resulting from the reduced harvests this year. In addition, lower prices for oil, fertilizer and shipping than in 2008 will ease the cost of impporting food and planting next year’s crop.
But Marc Sadler, head of agriculture risk management at the World Bank, said the situation was also more ‘complicated’ than in 2008, when rice and wheat prices rose the most and then fell sharply the next year when plantings increased. 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 acre-age.