The World Bank (WB) has said that the domestic food price inflation in almost all low-and middle-income countries remained high across the world between February and May this year.
The global lender made the declaration in its latest Food Security Update report issued last week, saying the most-affected countries are in Africa, North America, Latin America, South Asia, Europe and Central Asia.
The report shows that inflation is higher than 5 per cent in 61.1 per cent of low-income countries, 79.1 per cent of lower-middle-income countries and 70 per cent of upper-middle-income countries, with many experiencing double-digit inflation.
Apart from this, it added, 78.9 per cent of high-income countries are also experiencing high food price inflation.
In real terms, food price inflation exceeded overall inflation in 79.8 per cent of the 163 countries where data is available.
The agricultural and cereal price indices closed 4 per cent and 12 per cent lower, respectively, while export price indices closed at the same level as two weeks ago.
The WB report said the decline in the cereal price index was primarily driven by a sharp decline in maize prices which dropped by 21 per cent compared to two weeks ago. Wheat prices also declined by 3 per cent while rice prices increased by 1 per cent over the same period.
On a year-on-year basis, maize and wheat prices are both about 19 per cent lower while rice prices are 16 per cent higher. Maize prices are 4 per cent lower, while wheat and rice prices are 1 per cent and 3 per cent, respectively, higher than in January 2021.
The July 2023 edition of the Agricultural Market Information System (AMIS) Market Monitor highlights geopolitical tensions that threaten the Black Sea Grain Initiative, including the collapse of the Nova Kakhovka dam and damage to the ammonia pipeline between Russia and Ukraine.
The flooding and disruption of irrigation, along with the demand to reopen the pipeline, are increasing tensions and could lead to the termination of the agreement, ultimately reducing Black Sea exports and undermining Ukraine’s production incentives.
Threat to food security
The Organization for Economic Cooperation and Development–Food and Agriculture Organization (OECD-FAO) Agricultural Outlook 2023-2032 — a 10-year assessment of agricultural commodity and fish markets at global, regional, and national levels, highlighted the threat to global food security from the surge in agricultural input prices in recent years.
One of the key concerns raised in the report is global food insecurity resulting from the surge in agricultural input prices in recent years. The outlook suggests that rising fertiliser costs can lead to higher food prices.
Using the Aglink-Cosimo modelling approach, the report estimates that, for every 1 per cent increase in fertiliser prices, agricultural commodity prices will go up by 0.2 per cent.
The impact is more significant for crops that depend directly on fertilisers than for livestock products, except for poultry and pork, which heavily rely on compound feed.
The outlook's medium-term projections are based on the assumption that current policies will remain in place and that consumer preferences and production technology will evolve as expected, although uncertainties related to environmental, social, geopolitical and economic developments could influence projections.
Following Russia’s invasion of Ukraine, trade-related policies imposed by countries have surged. The global food crisis has been partially made worse by the growing number of food trade restrictions put in place by countries to increase domestic supply and reduce prices.
As of June 5, 2023, 20 countries have implemented 27 food export bans, and 10 have implemented 14 export-limiting measures.
WB action
As part of a comprehensive and global response to the food security crisis, in April 2022, the World Bank announced that it is making up to $30 billion available over 15 months, including $12 billion in new projects.
The financing is to scale up short- and long-term responses along four themes to boost food and nutrition security, reduce risks and strengthen food systems.
The themes are to support producers and consumers, facilitate increased trade in food and trade inputs, support vulnerable households, and invest in sustainable food and nutrition security.
The WB has achieved its target of making a $30 billion commitment to food and nutrition security response. Between April and December 2022, its food and nutrition security commitments in new lending have passed the $12 billion mark – with almost half for Africa, which is one of the hardest hit regions by the food crisis.
The programme will enhance inter-agency food crisis response also boost medium- and long-term efforts for resilient agricultural production, sustainable development of natural resources, expanded market access, and a greater focus on food systems resilience in policymaking.
