Food prices increased significantly in 2010, WFP data shows

Feb 11 2011

Data from the World Food Program (WFP) - available ahead of the release of its annual report - shows the cost of feeding people around the world "increased markedly in 2010 as rising grain prices pushed up the cost of staple foods," the Wall Street Journal reports.

Even though the "agency bought 22% more food last year than in 2009, the amount it spent rose 30% to $1.25 billion," the newspaper writes. "Wheat purchases, which account for 39% of supplies, cost 59% more last year as the organization struggled to feed people displaced by devastating floods in Pakistan. The average cost of a metric ton of wheat rose to $246 in 2010 compared with $218 a year earlier," the Wall Street Journal reports, noting rising food costs have "been blamed for sparking unrest" in Tunisia and Egypt.   

"When there is an increase in international prices it does increase local prices, so our capacity to help people is reduced," said Abeer Etefa, the WFP's senior spokeswoman in Cairo. The newspaper notes the steps Egypt and other governments are taking to address rising food costs. "Not only in Egypt, but all through the region, governments will continue to pump money into food systems to ensure subsidies are maintained," Etefa said.

The result is that the WFP will have to feed a "growing" number of people "at a time when many governments' budgets are already stretched," the newspaper writes. To counter escalating international food prices, the WFP has been trying to increase its purchase of domestic grains, said Caroline Hurford, a spokesperson for the agency. "During 2010 our major regional purchases were done in Pakistan, Ethiopia and South Africa," she said. "Of the 3.2 million tons of food purchased in 2010, 2.6 million tons were purchased in developing countries, representing 83% of the total quantity purchased for the year," she said (Henshaw, 2/9).

Sub-Saharan Africa, Caribbean Must Prepare For Food Price Increases, IMF Official Says

"The World Bank and International Monetary Fund are warning poor regions that have so far not been hit by rising food prices, like sub-Saharan Africa and the Caribbean, to get ready to face them," Reuters reports.

Hugh Bredenkamp, deputy director of the IMF's Strategy, Policy and Review Department, said the prospect of a full food crisis "is a concern and countries should be getting ready for it."

"The direct impact of food prices on CPI [consumer price index] is a one-time thing, but in itself is not inflation, so countries should accommodate ... set monetary targets to accommodate the direct impact from price jumps," he said, adding that "countries need to be careful not to allow second-round effects, so if food prices go up (they) don't want that to spill into higher wages or prices of other products." Bredenkamp also noted how the current situation differs from the 2007-2008 food crisis, noting that not all regions have seen a rise in food prices. "One area where the impact so far has been very limited is in Sub-Saharan Africa, where local harvests and local supply conditions have been better than average," he said.

"Chris Delgado, strategy and policy advisor in the World's Bank's Agriculture and Rural Development Department, emphasized that a rising middle class in emerging economies was more of a factor this time," Reuters writes. "I don't think there is any way to really ignore the role of rapid demand increase for consumer goods in the emerging and developing nations," he said. According to Delgado, the world's poor spend more than 80 percent of their disposable income on food, so a rise in food prices would mean they have no alternative but to eat less (Wroughton, 2/10).

China To Spend $1B Over 60 Years To Address Drought

In China, amidst "a long dry spell in the world's largest wheat-growing region," the government has said it will allocate $1 billion in the next 60 years to "boost grain production, divert water, build emergency wells and take other steps in the affected areas in central and northern China," the Associated Press reports. According to the article, "China, the leading producer of wheat worldwide, has been largely self-sufficient in growing the grain, but the drought threatened the winter crop and could even impact the summer production" (Tran, 2/10).