21 August 2013

Africa: Food Prices Drop, but Subsidies Still a Concern, World Bank Says


Washington — Prices of internationally traded food commodities continued to fall from February to June for the third consecutive quarter since their historic peak in August 2012, according to the World Bank.

Some countries with weak safety nets are responding to price uncertainty by scaling up food subsidies that the World Bank says are counterproductive.

In its Food Price Watch, the Bank reports that increased food production combined with declining demand from large importers pushed overall prices down. However, prices remained high in some countries due to unstable weather conditions, dwindling supplies, currency devaluations and public procurements.

According to the Food Price Watch, grain prices decreased 2 percent from February to June, while prices of fats and oils were down 3 percent. Meanwhile, fertilizer prices decreased 8 percent.

Looking ahead, uncertainty in the international market remains.


The Bank said good wheat harvests are expected in 2013 from Australia, Europe, the Black Sea region and China because of good weather. However, wheat output in the United States is expected to decline as a result of slow plantings in May. With higher demand from major importers, and recent unfavorable weather in Central Europe, Russia and China, wheat stocks may not rebound.

Between February and June, the largest wheat price increases occurred in India, Ethiopia and Sudan. In contrast, wheat prices decreased 10 percent to 15 percent in the Democratic Republic of the Congo, Colombia and Afghanistan due in part to reduced import prices, according to the World Bank report.


Global maize production is expected to reach a new record in 2013 with major increases from China, Europe, Brazil, Argentina and the United States. However, due to late planting in the United States, the crop will be vulnerable to hot and dry weather during its most important maturation time, the Bank's report said.


Rice prices continued to decrease moderately due to good harvests in Thailand and Vietnam. High inventories in Thailand, Vietnam and India are forming the base of "comfortable" world rice inventories in 2013, the Bank's report says.


Recurring spikes in food prices have revived interest in government food subsidies, which were widely used by developing countries from the 1950s to the 1970s as a poverty alleviation strategy. But when poorly implemented, subsidies distort prices and agricultural production, boost fiscal deficits, do not help low-income people, and have been linked to corruption, the World Bank says.


In response to price volatility, the United States through its Feed the Future program and the World Bank have prioritized investing in agriculture and rural development, expanding public-private partnerships across the food supply chain, and improving nutrition among vulnerable populations.

Published quarterly, the Food Price Watch monitors food prices to help policymakers and people in the development community prepare for potential food crises.

A copy of the July 2013 report (PDF, 800KB) is available on the World Bank's website.

Copyright © 2013 United States Department of State. All rights reserved. Distributed by AllAfrica Global Media (allAfrica.com). To contact the copyright holder directly for corrections — or for permission to republish or make other authorized use of this material, click here.

AllAfrica publishes around 2,000 reports a day from more than 130 news organizations and over 200 other institutions and individuals, representing a diversity of positions on every topic. We publish news and views ranging from vigorous opponents of governments to government publications and spokespersons. Publishers named above each report are responsible for their own content, which AllAfrica does not have the legal right to edit or correct.

Articles and commentaries that identify allAfrica.com as the publisher are produced or commissioned by AllAfrica. To address comments or complaints, please Contact us.