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Global food prices are on the rise

Global food prices increased by 8% from December 2011 to March 2012, according to the World Bank Group’s Food Price Watch. This was due to higher oil prices, adverse weather conditions and a strong demand for food imports in Asia.

The prices of staple foods have been increasing

The World Bank’s Global Food Price Index was only 1% below what it was a year ago and 6% below its historic peak of February 2011. The Bank is warning that unless the current forecasts for increased food production actually materialise, global food prices will rise further.

Otaviano Canuto, World Bank Vice President, said that: “After four months of consecutive price declines, food prices are on the rise again threatening food security for millions of people.”

Prices of all key staples increased between last December and March, except for rice, which was in plentiful supply. Maize prices went up by 9%, soybean oil by 7%, wheat by 6%, sugar by 5% and crude oil prices also rose by 13%.

On top of this domestic food prices are remaining high, especially in Africa. This is due to a combination of large food imports, plus other factors such as trade restrictions between countries, hoarding, civil unrest, high fuel transportation costs and bad weather conditions.

The World Bank also noted some examples of exceptional domestic price increases. Between March 2011 and March 2012, wheat prices rose 92% in Belarus, and the price of maize went up by 82% in Malawi, 80% in Ethiopia and 71% in Mexico.

However, there is some good news. The outlook for food production for 2012/13 remains strong and there have been a number of factors which have brought downward pressure on prices. The previous record prices established at the end of 2010 and early 2011 have led to increased production of major crops throughout the world. Added to this the reduction in the use of maize for ethanol production in the US and the weakness of global demand resulting from the euro crisis have both helped to restrain price increases

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Posted in Africa, Agriculture, Development

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