If you were to look at the international food price index prepared each month by the U.N. Food and Agriculture Organisation (FAO), you might be forgiven for thinking last year's food price crisis was history.
In February, the headline Food Price Index, which represents the average of five commodity group indices based on international prices (meat, dairy, cereals, oils and fats, and sugar) was down at 140 - a significant fall from last June's peak of 214. Among the five commodity indices, cereals were around 35 percent cheaper than their high of last year, oils and fats about 54 percent, and dairy about 55 percent.
Last year's soaring inflation pushed an extra 40 million people into the ranks of hungry, hitting urban families especially hard. The FAO says 963 million people, or around 15 percent of the world's population, are now suffering from hunger and malnutrition.
But do the international price declines since last summer mean policy makers and aid agencies can stop worrying quite so much about how to help the world's poorest produce or buy enough food?
For Liliana Balbi, a senior economist with the FAO's Global Information and Early Warning System, that would be a wrong - and potentially dangerous - assumption. "It's one thing what's happening on the Chicago (commodities) market, and another what's happening in Malawi," she says.
This month, she and her team have launched an interactive database of staple food prices on national markets in 55 developing countries from Afghanistan to Zimbabwe. It shows that, while prices may have dropped on international exchanges, in many developing countries they have not fallen as fast, and in a few places they have even risen.
Elevated prices in developing countries matter more than in wealthier nations because the share of food in the budget of poor households is much higher. Food represents about 10 to 20 percent of consumer spending in industrialised nations, but as much as 60 to 80 percent in developing countries, according to FAO.
"World prices have declined, but you can see from the information (in the database) that it is not the same in developing countries," Balbi says.
"In all southern African countries, the prices have not declined at all, and where they have declined, it is not as much as in international markets, so the situation creates concern about the food security of these populations."
The National Basic Food Prices Data and Analysis Tool allows users to track the prices of different food commodities in local currencies or dollars, and local measurements as well as standard weights. You can also compare prices between domestic and international markets, between different markets in the same country, and between countries.
What's extremely useful is that, besides prices, the database gives you information about which commodity is the country's staple food, and which market is the most important. This is vital if you're not an expert on the food situation of individual countries.
The FAO started to compile the database after the global food crisis erupted last year, sparking a flood of requests for information. The U.N. agency realised it had only scattered and partial answers, and decided it should offer something more coherent, Balbi explains.
HELPING DECISION MAKERS
Research on a couple of southern African countries quickly reveals the divergence between domestic and international price trends. White maize on the retail market of Mozambique's capital Maputo cost 5.32 ($0.20) metical per kilo (adjusted for inflation) in December last year, compared with 4.11 metical in June, and 3.89 metical in January 2008.
And in Zambia, maize - the main staple food - cost 7,593 kwacha ($1.38) per 20 kg in December compared with 4,966 kwacha in June last year.
So for many people in these countries, the easing of international prices in the second half of last year has been largely meaningless.
Prices have continued to rise in Mozambique because of poor harvests due to drought conditions over the past two years and the delay of rains this season, according to the Famine Early Warning System. It currently classifies most of the south as moderately food insecure.
Balbi hopes the new FAO price tool will be used by aid agencies and policy makers working on food security.
"I think information is the starting point for any action in the humanitarian area or on policy decisions," she says.
When prices are high, this often indicates food shortages - which could help politicians and relief groups take early action to avert a food crisis. Or, if prices in a neighbouring country are low, an aid agency might decide to buy its supplies in the region rather than importing them from further afield.
But one thing the database isn't yet capable of is illuminating what's behind the price trends. This is partly because it's very difficult to generalise.
Most economists accept there is a time lag in international price movements feeding through to local markets. But that's only one factor. Others include weather shocks to production, export/import balances and government food policies - and these are specific to countries or even regions.
For example, last year in Pakistan, the government fixed wheat prices well below the international level. But in neighbouring Afghanistan, there was a bad harvest and prices rocketed, attracting some 2 million tonnes of wheat from across the border. Islamabad then faced a deficit and had to import wheat at much higher prices.
Balbi says the FAO would like to complement its new price database with a similar initiative looking at developing countries' food policies.
Expanding the range and type of information available would certainly help strengthen the aid community's efforts to make the right decisions at the right time.
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