IMF and WB see higher food prices but no crisis yet

WASHINGTON: Global financial lenders are advising countries to prepare for the possibility of higher food bills in the coming months, but for the moment the International Monetary Fund and World Bank see few signs of a widespread food price crisis like in 2007/08.
The worst drought in half a century in the United States and poor crops from the Black Sea bread basket have lifted prices of corn, wheat and soybeans. The price of rice — a staple food in Asia and parts of Africa — has so far been unaffected.
“We are not saying that we anticipate a major crisis at this point,” said Juergen Voegele, director of the World Bank’s Agriculture and Rural Development Department, told Reuters.
“The world has enough food, but of course we cannot predict the weather and if something extraordinary happens we might find ourselves in a difficult situation again.”
World Bank data shows that overall food costs are higher but not yet at record levels of 2007/08, which pushed millions into poverty as food prices rose across the board in tandem with sky-rocketing oil prices. The effects of the twin crisis in 2008 dissipated as the global financial crisis intensified and demand slowed.
“Our recommendation is that countries prepare very early on,” Voegele said.
“As long as our food stocks are so low,(price) volatility will not go away easily.”
The latest run-up in grain prices comes at a time when the world economy is slowing, the euro zone is in turmoil and unemployment is higher almost everywhere.
The danger for poor countries is that their fiscal firepower was eroded by the global financial crisis and their ability to deal with bigger food import bills will be limited.