World food prices fall but remain high – World Bank

World food prices have dropped in the third consecutive quarters, says the World Bank July 25, 2013.

According to the Bank’s Food Price Watch, global food prices continued to fall between February and June 2013, a trend observed since the recent all-time peak in August 2012.

But it noted that food prices were only 12% below the August peak.

The World Bank’s monitoring showed that higher production, declining imports and lower demand generally pushed export prices down although international markets continue to be tight for maize.

It said the current prices of wheat reflect expectations that world production will rebound this year from last year’s declines as rice prices continued to decrease moderately.

Domestic prices, meanwhile, generally followed seasonal trends but wide variations continued. Where prices rose between February and June 2013, the Bank attributed it to a combination of factors including bad weather, dwindling supplies, currency devaluations and public procurement policies.

Looking ahead, the World Bank said uncertainty in the international market remains. “Recently unfavourable weather conditions in northern and central Europe, the Russian Federation and China may affect the prospects of a rebound in the world wheat production,” it said and “the current situation in Egypt may also impact international markets of wheat, given Egypt is the world’s top wheat importer”.

Some countries with high poverty and weak safety nets are now responding to this chronic volatility by scaling up consumer food subsidies but these are often counter-productive, the World Bank Group’s quarterly Food Price Watch reported.

“Poorly designed food subsidy programmes that lack transparency and accountability in implementation do not benefit poor people,” said Jaime Saavedra, World Bank Group’s Acting Vice President for Poverty Reduction and Economic Management.

Saavedra observes that these programmes can be very costly and prone to corruption, and waste scarce fiscal resources.

“Reforming such programmes is a policy priority, leading the way to smart subsidies that target the most needed and complement existing safety nets,” Saavedra added.

By Ekow Quandzie