World Bank says global food prices fell again in latest period

by Reuters
Thursday, 25 July 2013 23:00 GMT

By Paige Gance

WASHINGTON, July 25 (Reuters) - Global food prices fell by 2percent in the latest four-month period, marking the thirdstraight period of declines, as declining imports in the MiddleEast and North Africa, and lower demand pushed prices down 12percent from their August 2012 peak, the World Bank said onThursday.

The World Bank's Food Price Index showed internationalprices of wheat fell by 2 percent, sugar by 6 percent, soybeanoil by 11 percent, and maize, or corn, by 1 percent during thefour-month period between February and June.

The index, which weighs export prices of food, fats andoils, grains, and other foods in nominal U.S. dollars, fell by 2percent.

Improved weather conditions after last year's droughtshelped bolster the production of wheat. The bank said it expectsgood harvests from the major producers to continue as long asunfavorable weather in northern and central Europe, Russia andChina does not drag on production.

Global maize production is expected to reach a record highthis year, according to the report, partly driven by a revivalin demand from U.S. ethanol producers.

While prices have stabilized recently, the volatility offood prices in recent years has prompted developing countrieswith high poverty and weak safety nets to respond by ratchetingup consumer food subsidies, the poverty-fighting institutionsaid.

The World Bank and the International Monetary Fund have madea big push in the past year to urge countries to scrap subsidieson consumer food to ease pressures on government budgets andfree up more funds for health and education spending.

Both institutions have also questioned whether suchsubsidies truly improve poverty - as they can often go tolarge-scale farmers or well-connected people instead of thepoorest.

"Poorly designed food subsidy programs that lacktransparency and accountability in implementation do not benefitpoor people," said Jaime Saavedra, active vice president forpoverty reduction and economic management at the World Bank."These programs can be very costly and prone to corruption, andwaste scarce fiscal resources."

According to the report, more direct forms of transfers,such as food stamps and public works, are more effective inhelping the poor. (Reporting by Paige Gance; Editing by Leslie Adler)