Rising food prices threaten poverty reduction - World Bank

WASHINGTON: High food prices are threatening recent gains in overcoming poverty and malnutrition and are likely to persist over the medium term, according to a new World Bank Group policy note released Wednesday.

“Poor people are suffering daily from the impact of high food prices, especially in urban areas and in low income countries,” said World Bank Group President Robert B. Zoellick. “In some countries, hard-won gains in overcoming poverty may now be reversed.”

“As an international community we must rally not only to offer immediate support, but to help countries identify actions and policies to reduce the impact on the world’s most vulnerable,” he added.

According to Rising Food Prices: Policy Options and World Bank Response, increases in global wheat prices reached 181 percent over the 36 months leading up to February 2008, and overall global food prices increased by 83 percent.

Food crop prices are expected to remain high in 2008 and 2009 and then begin to decline, but they are likely to remain well above the 2004 levels through 2015 for most food crops.

As the policy note pointed out, while households that are net producers may benefit from higher prices, price increases for staple foods will increase poverty in several countries.

Indeed, for many countries and regions where progress in reducing poverty has been difficult, the impact of rising food prices risks undermining the poverty gains of the last 5 to 10 years, at least in the short term. For example, in the case of Yemen, estimates show that the doubling of wheat prices over the last year could reverse all gains in poverty reduction achieved between 1998 and 2005.

“The poor are not just facing higher food prices but also higher energy costs, which is a worrying combination,” said Danny Leipziger, World Bank Group Vice President for Poverty Reduction and Economic Management.

“Policy responses to protect the poor from food price rises are urgent, and need to be designed in a way that is conducive to stimulating greater agricultural production in the long run.”

Xinhua