Global Food Prices Remain High, Says World Bank

Global Food Prices Remain High, Says World Bank
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The World Bank has stated that global prices of food remained high, even though its Food Price Index maintained the same rates between July and September 2011.

The World Bank, in its recently released Global Food Price Index (GFPI) indicated that despite dipping marginally in September 2011 by one percent and settling at five percent below its February 2011 peak, the food price index is still 19 percent above its September 2010 levels.

Also, the bank stressed that global price trends differ by commodity adding that over the last quarter an increase of three percent in the price of cereal grains was roughly offset by a  three percent decline in the price of fats and oils.

Meanwhile, in reaction to the World Bank report, experts have warned that the high component of food in the Consumer Price Index (CPI) basket and high food import bill in Nigeria strongly emphasised the need for food sufficiency in Nigeria.

To this end, analysts at FSDH Securities Limited, applauded current efforts of the Federal Government to transform the agricultural sector and unleash the benefits along the value chain.

The experts, however, warned that the immediate negative effect from a protracted high global prices of food would leave the country vulnerable with negative consequences, particularly on inflationary pressure build-up and worsening conditions for the rural dwellers and urban poor in Nigeria.

Explaining further, the World Bank stated that the increase in the price of grains was driven by an increase in the price of rice (11 percent) and Wheat ( four percent).

According to the bank: “Maize prices declined by two per cent, as did the prices of sugar ( six percent) and soybean oil ( two percent). During the same period, average crude oil prices declined by seven per cent but the price of fertilisers increased by  three percent. Although cereal grain stocks are expected to increase in 2011/12 they are still low at a 21 percent stocks-to-use ratio (and even lower at  seven percent for maize in the United States) even small shocks can have amplified effect on price volatility when stocks are low.”

The bank in the report indicated that, a favourable outlook on supply and stocks is likely to relieve some of the pressure on global food prices.

“The latest forecast from the United States Department of Agriculture (USDA) show global wheat stocks reaching a 10 year high in 2011/2012, following a rebound in production in major producing countries, which could cause global production to be 5 per cent higher than the estimated output for 2010/2011. Similarly, for maize, despite a marginal decline in expected production in the United States on account of the excessively hot summer, global production is forecast to increase by  four percent because of increased production in China, Ukraine, the Russian Federation, Argentina and Brazil.

“Global rice output is also likely to get a boost in 2011/2012, largely on account of a bumper harvest expected in India, following very beneficial monsoon rains. India also started allowing private entities to export non-basmati rice in July for the first time in three years, following a record build-up of government stocks. However, Thai rice exports are expected to decline in relative terms, from one-third to one-fourth of global exports by 2012, as a result of the increase in export prices due to the announcement of Thailand’s Rice Mortgage Scheme, “the bank said.

The World Bank however noted that other large exporters such as India and Pakistan are expected to fill this gap.

ALL AFRICA

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