food prices

Soaring food prices have suddenly become a major concern for policy makers in East Asia.  The price of rice - which provides one third of the region's caloric intake - is a particular worry.  Rice prices have been moving higher since around 2004, although this was from very depressed levels in the early years of the decade.  Prices surpassed $300 a ton in early 2006 for the first time since the late 1990s, kept moving higher, and then took off at an accelerating pace from late 2007:  up 11 percent in the the fourth quarter, then 56 percent in the first quarter of 2008 and then 61 percent in April 2008 alone. Prices touched over $1000 a ton on some days in April. Domestic food price and overall consumer price inflation has accelerated in most economies and the pace of poverty reduction in East Asia  in 2008 is - at a minimum - likely to slow .

I see there has been some blog chatter about the World Bank's position on Thailand's rice exports. Let me take the chance here to set the record straight: Thailand is a great international trading partner, it's commited to maintaining its rice exports, and we support this action. This is very important at this time of food price hikes and it's the responsible thing to do.

(The chatter --see some examples here and here-- started with a Bloomberg story  published yesterday).

The new Global Monitoring Report 2008 is warning that most countries are likely to fall short on the eight Millennium Development Goals (MDGs), which have a due date of 2015.  World Bank president Bob Zoellick stresses that eradicating extreme poverty and hunger (Goal 1) is fundamental to making progress on additional goals like reducing child mortality.  This graph shows the actual as well as projected decline in the population of people living on $1 a day in the world's regions, including East Asia and the Pacific.

High food prices on the international markets are getting a lot of attention and are leading to different types of policy action in different countries. Discussions on the impact of international commodity prices on domestic prices often look at how much food countries import. The reasoning is that if countries are significant importers of food, domestic food prices are affected a lot by international prices, and if they are not significant importers, the impact of international prices should be limited.

Web reporters were busy last week with news of soaring prices for grains and other agricultural commodities.  Economist.com posted an early entry with Food for Thought on March 27.  NYT.com ran this piece on March 29.  BBC.com followed on April 3, focusing on Asia with Asian states feel rice pinch.  The following day FT.com had posted an entire page titled: In depth: the rising cost of food, while Bloomberg.com’s Glenys Sim reported from Singapore.

World Bank President Robert Zoellick is calling for a New Deal for global food policy – a reference to the 1930s Great Depression-era initiatives of American president Franklin D.