FAO Food Price Index reaches new high in January

Feb 4 2011

World food prices reached a new record high in January, continuing a trend for the seventh consecutive month, the U.N. Food and Agriculture Organization (FAO) said on Thursday, the Guardian reports (Kollewe, 2/3).

"The FAO Food Price Index, which monitors monthly price changes for a basket of commodities, averaged 231 points in January - up 3.4 percent from December and its highest level since FAO started measuring food prices in 1990," Agence France-Presse writes (2/3).

"The new figures clearly show that the upward pressure on world food prices is not abating," said FAO economist Abdolreza Abbassian, the Guardian writes. "These high prices are likely to persist in the months to come. High food prices are of major concern especially for low-income food deficit countries that may face problems in financing food imports and for poor households which spend a large share of their income on food," Abbassian, who is also a grains expert, added. "The only encouraging factor so far stems from a number of countries, where - due to good harvests - domestic prices of some of the food staples remain low compared to world prices," he said (2/3).

In a press release, FAO noted that its "Food Price Index has been revised, largely reflecting adjustments to its meat price index. The revision, which is retroactive, has produced new figures for all the indices but the overall trends measured since 1990 remain unchanged." According to the January index, cereals, oils/fats, dairy and sugar prices rose since December. "By contrast, the FAO Meat Price Index was steady," the release states (2/3).

World Bank Leaders Discuss Food Price Spikes

"The world faces a broader trend of increasing food and commodity prices and more countries should wake up to the need to curb price volatility, World Bank President Robert Zoellick said on Wednesday," Reuters reports.

"We are going to be facing a broader trend of increasing commodity prices, including food commodity prices," Zoellick said in a phone interview. "This can put pressure but also create opportunities," according to Zoellick, who said developing countries could increase revenues by expanding food production to meet growing global demand.

He also "called on G20 global leaders to 'put food first' to tackle the surge in prices and increased volatility threatening the poor and driving up inflation in developing countries, mainly in Asia," the news service writes. "2008 should have been a wake-up call, but I'm not yet sure all the countries in the world that we need to support this have woken up to it," Zoellick said. 

"We believe that while there are differences from the 2008 period, one core policy issue that is the same is that it looks like it will be a very tough year for the chronically malnourished," he said after noting the rise in the FAO's Food Price Index.

"Zoellick wants the G20 to recognize a larger role for development banks, such as the World Bank, in changes dealing not only with the immediate needs of poor countries faced with higher food prices, but in improving agricultural productivity. ... Zoellick said the World Bank had reactivated its emergency financing facility for poorer countries dealing with the effects of higher food prices, although the impact on African countries of the latest increase has not been as severe," Reuters reports (Wroughton, 2/2).

Meanwhile, Obiageli Ezekwesili, the World Bank's Africa vice president, said expanded investment in African agriculture over the past few years put the continent in a better position to face food price increases last year, Bloomberg writes.

"The situation is different to 2008-09 when many of the African countries were really caught in a bind," Ezekwesili said in an interview in Addis Ababa, Ethiopia. "Today what we have is a more ebullient harvest environment," she said. "Investment since 2008 in infrastructure, irrigation, fertilizer and seed technology has reduced reliance on grain and rice imports, particularly in West African countries, Ezekwesili said."

In a January 30 speech to the African Union, French President Nicolas Sarkozy focused on commodity speculators' roles in driving up food costs. "Instead of clamping down, 'light touch regulation' to improve information on the quantity and quality of food stocks should be introduced, Ezekwesili said. 'Having a system that allows transparency helps to reduce the opportunities for rent seeking and speculation that are inimical to the needs of the poorer people,' she said" (Davison, 2/2).

Unrest Across The Middle East; New Food Price Control Agency In Cameroon

"Countries in north Africa and the Middle East are urgently seeking ways to soften the blow of surging food prices for their citizens, alarmed by protests against authoritarian rulers from Algeria to Yemen," Reuters writes in a story examining the situation.

"Food costs are among the grievances of demonstrators around the region as global food prices hit record highs in December," according to the news service. "Algeria, Libya and Jordan have either relaxed food taxes or duties on food imports or cut prices of staple food, and Kuwait recently introduced a generous stipend and free food for its citizens until March 2012 to ease the pain of higher costs. There is also simmering unrest in Yemen, the poorest Arab country, where 40 percent of the population lives on less than $2 per day," according to Reuters.

The article also looks at why prices have been rising in the region and whether purchasing additional farmland could help the situation (Al Sharif/Dokoupil, 2/3).

IRIN reports on the situation in Egypt. "Long queues have been common over the past few days outside bakeries selling subsidized bread, supermarkets and vegetable sellers. ... [T]here have been reports of hoarding and price hikes. New Egyptian Prime Minster Ahmed Shafiq said his priority was to secure steady supplies of food, and Minister for Social Solidarity Ali Moselhi said Egypt had sufficient wheat stocks, but such announcements do not seem to have diminished the bakery and other queues," the news service writes. "The government says hospitals are stretched to capacity, but people are not sure of the real situation. One Cairo man was shown on Egyptian TV saying he had tried in vain to get an ambulance to come and pick up his elderly father for kidney dialysis treatment," according to the article (2/2).

In Cameroon, Trade Minister Luc Magloire Mbarga Atangana said Thursday that the country has created an agency to purchase and regulate food imports, "in an apparent bid avoid a repeat of price rises that caused violent protests three years ago," Reuters reports. In 2008, about 100 people were killed during food price riots in Cameroon. 

"The government-run Agency for the Regulation of Supplies of Basic Consumption Goods will import and stock major food items that will be sold only at approved prices, [Atangana] said on state radio," the news service writes. "The decision does not forbid other enterprises from importing food products into the country," said the minister. "But (it is) just to ensure prices do not go beyond the reach of the average Cameroonian," he said (2/3).