Global food prices declined by six per cent over the last quarter, but are still not far from their historical peaks, according to the World Bank Group’s (WBG) latest Food Price Watch report. Wheat markets remain tight; and weather-related concerns in Brazil, Paraguay, Argentina, Ukraine, and the Russian Federation may further drive up wheat prices over the next few months.
Domestic prices showed typically large variations across countries, mainly attributable to seasonal trends but also due to a combination of factors including bad weather, public procurement policies, local supply shortfalls and currency devaluations.
“Sustained declines in prices are welcome – we have a lot to be pleased about,” said World Bank Group, Poverty Reduction and Economic Management Network acting Vice President Ana Revenga.
“But these gains are fragile. Persistent concerns around erratic weather or currency fluctuations keep us far from claiming victory over food prices. We need to continue to pay close attention, since this progress can quickly be reversed if concerns become reality.”
All-time high
According to the latest edition of Food Price Watch, the bank’s Food Price Index in October 2013 was 12 per cent lower than a year ago and 16 per cent below the all-time peak in August 2012. Despite this decline, however, prices remain close to their all-time high.
Stronger demand for wheat, especially from China, a weaker U. S. dollar, and increasing concerns following the recent adverse weather have affected prices in a negative way. Initially, price increases were almost imperceptible in August and September, but then increased sharply in October.
Global wheat stocks are expected to partially recover from last year’s declines, but major exporters’ closing stocks continue to remain low, still reflecting tight export availabilities. Rice and maize stocks, on the contrary, continue to be robust and are expected to remain that way through the end of the year.
This issue of the Food Price Watch also explores the role that extra-large scale farming, popularly known as “super farms” may play in boosting agricultural productivity and poverty reduction.
The jury is still out on whether this trend has a positive or negative effect on boosting shared prosperity, especially in those countries with fragile institutions and poor oversight: social, environmental and animal welfare concerns must be weighed with potentially promising benefits such as jobs and efficiency gains.
The World Bank Group said it is committed to boosting agriculture and agriculture- related investment. In 2013, new bank group commitments to agriculture and related sectors were US$ 8 billion.
For the International Bank for Reconstruction and Development (IBRD) and the International Development Association (IBRD/ IDA), assistance to agriculture and related sectors has risen from an average of nine per cent of total lending in FY10-12, to 12 per cent in FY13.
Food supply chain
IFC made US$ 4.5 billion in private sector investments across the food supply chain in FY13. These investments supported projects that promote access to finance, access to inputs like seeds, equipment and advice, and access to markets through infrastructure and food-processing facilities.
The WBG also supports the Global Agriculture and Food Security Programme (GAFSP). Eight countries and the Bill and Melinda Gates Foundation have pledged about US$ 1.3 billion over three years, with US$ 1.1 billion received. Besides, the bank said the GFRP has reached 66 million people in 49 countries – through US$ 1.6 billion in emergency support.
As of July 2012, the bank’s emergency response is channelled through IDA’s Crisis Response Window and the Immediate Response Mechanism.
Boosting IBRD/ IDA allocations to safety nets (rose sixfold from US$ 1.2 billion in the FY06-08 pre-crises period to over US$ 10 billion in FY09-12).
