Global Food Prices, Fertilizer Prices Soar

August 22, 2011 07:05 AM

Global food prices have marched decidedly higher over the past year, and when combined with continued volatility, put the poorest people in the developing world at continued risk, according to the Aug. 15 Food Price Watch by the World Bank.

Prices in July 2011 overall remained 33% higher than a year ago, with commodities such as corn (up 84%), sugar (up 62%), wheat (up 55%) and soybean oil (up 47%) contributing to the increase. But margins for farmers are also being squeezed because production costs are rising at such a rapid rate. Crude oil prices are 45% higher than July 2010 levels, affecting productions costs and the price of fertilizers, which increased by 67% over the same period. The quarterly report says that uncertainties about the global economy combined with the political situation in the Middle East and North Africa will likely keep oil prices volatile in the short term.

Food prices from April through July settled roughly 5% below the recent spike in February 2011 due to modest declines in grains, fats and oil, and other food such as meat, fruits and sugar. However, prices of some commodities remained volatile during this period. For example, corn and wheat prices declined in June and then increased in the first half of July. The price of rice fell from February to May, but has since increased.

"Nowhere are high food prices, poverty and instability combining to produce tragic suffering more than in the Horn of Africa," says World Bank President Robert Zoellick. "The World Bank is stepping up with short term help through safety nets to the poor and the vulnerable in places like Kenya and Ethiopia, along with medium term support for economic recovery. Long term support is also critical to build drought resilience and implement climate-smart farming."

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