Poverty rises as food prices increase

Sunday, April 17, 2011

Various grains.
Image: Rainer Zenz.

The World Bank, an organization that provides loans to developing countries, warned Thursday that rising food prices are driving millions of people deeper into poverty.

Robert Zoelick, World Bank president, said that food prices have risen 36% over the last year, pushing 44 million more people into poverty since last June. About 1.2 billion people are extremely poor.

He warned that a further increase of 10% in the cost of food would move an additional 10 million persons into extreme poverty, and there was no sign of a near term reversal in the inflation of food prices, which affects the developing world disproportionately.

"We have to put food first and protect the poor and vulnerable, who spend most of their money on food," said Zoellick. “The general trend lines are ones where we are in a danger zone… because prices have already gone up and [food] stocks are relatively low,” he said.

The general trend lines are ones where we are in a danger zone.

—Robert Zoelick, World Bank president

The cost of the basic foods, such as wheat, maize and soy are all surging. Only rice has shown a slight decrease in price.

The steep rise in the cost of food is being driven by a combination of factors, including bad weather in food exporting areas such as Russia, Ukraine, North America and China, rising energy costs that increase the cost of producing and transporting food, and the incentives for farmers in many countries to produce crops for biofuels instead of for food.

"The linkage between food and fuel is much tighter than it was ten years ago," said Zoellick.

Additionally, the change in diet of the growing middle class in developing countries means they consume more meat and pork products which take increased grain to produce and drives up the price of feed stocks.

The linkage between food and fuel is much tighter than it was ten years ago.

—Robert Zoelick, World Bank president

National food investment and export policies of some wealthier countries are affecting poorer nations. For example, China is acquiring large amounts of land in Africa to grow food for the needs of the Chinese; Saudi Arabia has given up wheat production to invest overseas for food, and a drought in Russia has led it to implement an export ban on wheat.

Zoellick spoke in Washington at the opening of the meetings of the World Bank and the International Monetary Fund (IMF). He hopes to discuss food policies with officials of the G-20 countries to develop a "code of conduct" on export bans and to encourage these countries to do more to increase food production and aid developing countries in managing agricultural problems.

On Saturday, the World Bank and the IMF issued "Global Monitoring Report 2011: Improving the Odds of Achieving the MDGs" which said the world was still on track toward reaching a key goal of reducing the number of the world's people living in extreme poverty and hunger by half, to 883 million, by the target date of 2015. Most of the world's progress is due to fast growth in India and China, while African countries are behind.