A record high price in many food staples is pushing millions into poverty and contributing to unrest in countries like Algeria, Tunisia, Egypt and Yemen, World Bank President Robert Zoellick said this week.
In January, global food prices hit their highest point in the 20 years since the United Nations first started tracking the cost of food. The spike in prices has pushed about 44 million people into extreme poverty since June, said Zoellick, speaking prior to a meeting of G-20 finance ministers in Paris Feb. 18-19.
“It is poor people who are now facing incredible pressure to feed themselves and their families — as more than half of a poor family’s income goes just to buy basic foodstuffs,” he said Tuesday. “Global food prices are now at dangerous levels.”
The U.N.’s Food and Agriculture Organization estimated that the cost of food — captured by its food price index — went up 3.4 percent in January compared to December 2010, and is almost 30 percent higher than it was a year ago.
Numbers on the left are the points by which FAO measures food commodities.
Weather extremes, including the 2010 wildfires in Russia and floods in Pakistan and Australia, contributed to limited food supply and high costs.
Even prior to this drastic increase in food prices, approximately 925 million people were undernourished, according to the United Nations.
Food price hikes can also increase the risk of political instability. According to the FAO, an increase in the regulated price of bread by 30 percent in September 2010 in Mozambique caused civil upheaval, which put enough pressure on the government to keep subsidies in place.
And this year, soaring food prices were “an aggravating factor” in social unrest in Algeria, Tunisia, Egypt and Yemen, Zoellick said, though other analysts contend the connection is not that direct. Zoellick urged the G-20 ministers “to put food first.”
The FAO’s price index reflects monthly changes in the international prices of five commodity groups, including meat, dairy, cereals, oils and fats, and sugar.
The largest increases occurred in cereal, sugar and oils. In just three months, the global price of sugar went up 20 percent and the price for oils increased by 22 percent. January corn prices were around 73 percent higher than in June 2010.
The United Nations recently released a report saying floods in Sri Lanka destroyed more than 30 percent of country’s rice harvest. And above-average rains in Southern Africa pose food insecurity risks as well.
Last week, the FAO issued an alert that a severe winter drought in the North China plain, the country’s wheat belt, may put wheat production at risk.
But according to Oxfam, spikes in prices are not yet global. In some parts Africa, thanks to bounteous harvests, prices remain comparatively stable.
Also helping are rice prices that have not followed the upward trend, FAO senior economist Abdolreza Abbassian said in an NPR interview. Rice prices stayed below the 2010 levels and are about 50 percent below the 2007 and 2008 levels, giving some comfort “at least in countries where rice is very important as a food, such as in Asia,” he said.
The causes of high food prices are different than the last price surge in 2008, when the spike in cereals in particular was caused by the dramatic increase in the price of oil, which reached US$150 a barrel. As a result, transportation costs went up.
High prices of oil also made producers consider biofuels as an alternative source of fuel, further driving up the prices of food. And export restrictions imposed by governments across the globe also reportedly contributed to the price surge, according to the U.N.