World Bank President says, A new Global food crisis just ahead
Rising food prices, which the World Bank says have hit dangerous levels, have put the issue of food security in the Global spotlight during the past week.
From Asia to the Middle East and to Latin America, the trends of food prices have aroused widespread public concerns Globally and in the developing world in particular.
World Bank Group President Robert B. Zoellick warned Tuesday: Global food prices are rising to dangerous levels and threaten tens of millions of poor people around the world.
Rising food prices have driven an estimated 44 million people into poverty in developing countries since last June, as food costs continue to rise to near Y 2008 levels.
The latest edition of Food Price Watch, a research publication by the World Bank, showed that its food price index rose by 15% between October 2010 and January 2011. It is 29% above its level a year earlier and only 3% below its Y 2008 high.
The Big Q: What are the main factors behind the food price spikes?
The Key lies in the loose monetary policy of the United States, the financialization of the Global farm produce market, the development of bio fuels, and the extreme weather events affecting harvests in the World's main grain-producing areas.
The US Federal Reserve is seen as driving up food prices by turning on its USD printing presses, and devaluing its own currency, one observer says The food crisis is a Dollar crisis.
Several years ago, a study by the World Bank concluded that bio fuel development in the United States and the European Union were directly responsible for the explosion in grain and food prices Worldwide.
The study, once Confidential, was revealed by the London-based Guardian newspaper in Y 2008 causing a Worldwide sensation.
And the increasing financialization of Global agricultural product markets in recent years has also made food prices more volatile as investor speculation, and panic can increase the range of food price fluctuations.
When prices of staple foods rise, its impact varies greatly between rich and poor countries; from minimal to almost distressing.
In some of the poorest countries in the World, people spend a significant portion of their household expenses on food and feel the pinch as food prices rise.
In efforts to stem spiraling food prices, the International community should strengthen co-ordination and measures should be taken to urge the developed countries to adopt responsible monetary polices and tighten supervision over staple commodities markets.
As for the developing World, the best way out of the food crisis is to increase agricultural inputs, and improve productivity to boost agricultural production and grain supply. That is coming.-Paul A. Ebeling, Jnr. www.livetradingnews.com