Another Warning of Coming Food Crisis

World Bank chief warns on food threat

By Chris Giles in Washington, Financial Times, April 14 2011
Soaring food prices have created a “toxic brew of real pain contributing to social unrest”, the head of the World Bank said, urging action by the Group of 20 to reduce volatility of food prices and improve food security.

The international financial institution estimates that 44m people have fallen into extreme poverty, living on less than $1.25 a day, as a result of food prices rising by 36 per cent during the past year.

Robert Zoellick, president of the World Bank, said that with prices close to the 2008 peak, “we are at a real tipping point” at which another 34m people could be driven into poverty if food prices were to rise another 30 per cent. Food price inflation hits the poor hardest because they spend a larger proportion of their incomes on food and other basic commodities.

World Bank data in the latest food price watch show that on top of this the recent rise in food prices has also been highest in low and low-to-middle income countries. They are most exposed to the surging raw material costs of food, rather than processing, marketing and distribution, which is more important in advanced economies.

Mr Zoellick warned countries not to impose export bans on food, a policy that increases the volatility of the global price, and hoped a new code of conduct would prevent any bans applying to humanitarian supplies such as the World Food Programme.

Commenting that the rise in food prices contributed to the turmoil in the Middle East and north Africa, Mr Zoellick promised new World Bank lending to Tunisia, amounting to $500m to support its budget.

“We should remember that the revolution in Tunisia started with the self-immolation of a fruit seller who was harassed by authorities,” he said.