Food Prices Decline but Near Record Highs, World Bank Says

Maize farmers, like this one in Guatemala, saw good harvests in 2012.

Washington — World food prices continued to decline during the five-month period ending in October, thanks to record harvests of wheat, maize and rice, stronger global stocks and a weakened dollar, the World Bank reports.

However, even though prices were 12 percent lower than a year ago, prices remained close to their 2008 all-time highs, the bank says in its November Food Price Watch. While overall prices declined 6 percent between June and October, prices of wheat increased 4 percent from June to October and then by 6 percent in October, it says.

The World Bank says that despite the months of food price declines and significant improvements in reducing extreme poverty, progress in reducing global chronic hunger has been fairly modest. It says that increases in food demand as the world’s population grows to 9 billion people by 2050 continue to highlight the need for sustained increases in agricultural productivity.

To help meet the world’S current and future food needs, the U.S. Agency for International Development (USAID) is scaling up its support for scientific and technological agricultural research. USAID also is helping countries develop sustainable agricultural strategies and helping farmers access capital and extension services so they can produce more food.

Wheat markets remain tight as China’s demand increases and as unfavorable weather in South America, the Black Seas region and India causes concerns for winter wheat harvests that may drive up wheat prices over the coming months, the bank says. In contrast, maize and rice stocks remain strong and are expected to stay that way through the end of 2013.

The World Bank’s Commodity Market Outlook says that, historically, global stocks take time to recover from supply shocks such as those caused by the 2012 droughts.

Domestically, prices across countries varied widely during the five-month period due to bad weather, public procurement policies, local stock shortfalls, uncertainties over how much maize will be used to produce ethanol, and currency devaluations, according to Food Price Watch.

Food Price Watch is a series that aims to draw attention to trends in food prices and their implications. The report (PDF, 924KB) is available on the World Bank website.