Tuesday, February 15, 2011

World Bank report: Jump in global food prices pushes millions into poverty

By Howard Schneider | February 15, 2011; 12:17 PM ET
The Washington Post

Rising food prices pushed millions of people into extreme poverty last year and is reaching "dangerous levels" in some countries, World Bank President Robert Zoellick said Tuesday as he released new data showing the cost of grain and other staples is near its historic high.

A bank index of food costs rose 15 percent over the last four months and is now just 3 percent below the level reached in 2008, a historic high that eased during the economic downturn.

Wheat prices have been among the fastest moving, doubling between June and January as Russia restricted exports, Australia's crop was damaged by flooding and the size of China's upcoming winter crop has been cast into doubt due to an ongoing drought.

The likelihood that political turbulence in the Middle East might prompt countries like Egypt to increase their grain reserves is also pushing up the price of wheat and other grain futures on world commodity markets, the bank reported.

There are some bright spots: the rice harvest has been strong, and prices for that staple have increased more slowly than for other grains. In Africa, people have begun substituting local products like sorghum and cassava for imported food.

But the bank estimated rising food costs pushed an additional 44 million people below the threshold of extreme poverty, meaning they are surviving on the equivalent of $1.25 a day. It also threatens to undermine public budgets in places like Albania and Tajikistan that rely heavily on imported food and have little ability to pay more.

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