DRAFT paper @ CS_2011-09-24
Global rise in food prices
Global food prices have been rising unabated. When food prices spiked in mid-2008, the levelwas cited as being the highest threshold reached in recent memory. Unfortunately,
prices have even surpassed the limit reached in mid-2008 (see Figure 1). The Food and
Agriculture Organization‘s (FAO) Food Price Index (
averaged 234 points in June 2011,one percent higher than in May this year and 39 percent higher than in June last year. A recentreport by the high level panel of experts on food security and nutrition states that agricultureprice volatility in the past five years has been higher than in the previous two decades, but lowerthan it was in the 1970s (HLPE, 2011).The rise in prices of food commodities is not homogenous. Prices of some food items haveincreased more than the other. For instance, currently price of sugar has been the highest of allcommodities tracked by the FAO. Sugar price declined till May 2011 and then again started torise rapidly. Price of cereals (particularly wheat and maize), dairy, and meat are consistentlyrising while that of oil and fats is stabilizing (though at an already high level compared to lastyear).The rise in world food prices after July 2010 is attributed to extreme weather events in majorfood producing countries and restrictions on grain trade, leading to higher food prices. Forinstance, Russia, the US, China and Central Asia were battered by drought. India and Russiaimposed embargo on grain export, the US and the EU saw unfavourable weather conditions andPakistan and Australia had heavy rains and floods
all putting pressure on food supply and thenfood prices. Currently, the Horn of Africa is facing food emergency primarily caused byprolonged droughts especially in areas struggling with conflict and internal displacement such asSomalia.
The FAO Food Price Index is a measure that tracks the monthly change in the international prices of a basket of five food commodity groups (cereals, oilseeds, sugar, dairy and meat). The index is considered as a globalbenchmark for food price trends.
Near Record High Food Prices Keep Poorest People on the Edge