Bad news on food prices – they’re going up again

June 11, 2009

     By Duncan Green     

World Food Prices, 2005 to June 09According to the FAO’s excellent and user friendly (even I can make it work) website on world food prices, which has both global price trends and breakdowns by individual country/commodity, world food prices bottomed out some time in February this year, and are now on their way back up again (see graphs – composite food price figure for 2009 is the rising white line on the left hand graph). Oil and mineral prices are also back on the upward curve.

Back in March, I pointed out that the same FAO database was showing that the previous fall in world prices was not translating into a fall in consumer prices – prices had become sticky for some reason. So are consumers also insulated from the new round of price rises or are they getting the worse of both Kenyan maize pricesworlds and seeing consumer prices start to rise? A cursory trawl of the website (you could spend hours on there), suggests a mixed picture. In some eg Kenya, prices have resumed their upward path (see graph).

All this is confirmed by an email from Fred Mousseau, our food security specialist, from Ethiopia, which reads:

‘I confirm from East Africa where I’m doing some research at the moment and where several countries including Ethiopia and Kenya are still in the same situation of food crisis. While it hasn’t been in the news since last year, prices have decreased but remained high. The humanitarian appeal for Ethiopia 2009 is actually exceeding the one of last year. We are talking at the moment of 20 mn people highly food insecure in the region. Interestingly, when you ask people about the 2008 food crisis here, they don’t see it as a one off event in 2008 and consider they are still in the same situation. The current humanitarian appeal for Ethiopia is only covered at 45% at the moment while we are entering the hunger gap. I met people in the Government today who were asking Oxfam to push donors on more resources.’

Update: 4 July 2009. The Economist has a two page spread trying to explain why food prices are rising again when superficially, you would expect production to rise in response to price signals and then prices fall back. Their conclusion is that nearly all the initial supply response to the food price rise came from farmers in rich countries, not poor ones. Prices resumed their upward path because ‘slow irreversible trends’ were at work – population growth, the shift to meat consumption and that a ‘genuine mismatch of supply and demand’ remains.

June 11, 2009
 / 
Duncan Green
 / 

Comments