Charting food price shock, and the World Bank’s economy with truth.
The World Bank’s Food Price Watch for 2012 August has been released (it is a part of the Poverty Reduction and Equity Group’s Poverty Reduction and Economic Management Network). The Watch has in its overview mentioned prices of internationally traded maize and soybeans reaching all-time peaks in July. The rise in prices of wheat – comparable to the 2011 peaks – and the relative stability of the prices of rice have also been mentioned.
The Watch has said: “World Bank experts do not currently foresee a repeat of 2008; however negative factors — such as exporters pursuing panic policies, a severe el Niño, disappointing southern hemisphere crops, or strong increases in energy prices — could cause significant further grain price hikes such as those experienced four years ago.” This idea – of no repeat of 2008 – is plain wrong. The food price spike crisis of 2007-08 did in fact never go away, it subsided for some months, and has this year entered a new phase of pain for consumers particularly those in rural districts and the urban poor, wherever they may be.
(Chart source: World Bank (2011), ‘Responding to Higher and More Volatile World Food Prices’ Development Committee Paper prepared by the Agriculture and Rural Development Department using data from FAOSTAT for net cereal imports as a share of consumption and the USDA for food share in household expenditures.)