Persistent food price hike can be devastating for the poor: WB
Saturday, 8 March 2008
S M Jahangir
The World Bank (WB) has cautioned that persistent increase in the prices of staple foods could be devastating for the poor people of Bangladesh, especially who often spend more than half their incomes on food.
"… A low-income family, say in Bangladesh, that might pay 20 cents for a kilogram of rice one year and 30 cents the next," the WB said.
It said: "For poor people who often spend more than half their incomes on food, unrelenting increases in the price of staples can be devastating."
While the urban poor are most affected, it is worth remembering that most rural people are buyers rather than sellers of food, the World Bank said, adding that there could well be severe effects for landless rural workers whose subsistence wages may not increase apace with food prices.
Referring to a recent statement of the UN Food and Agriculture Organisation (FAO), the report said 36 countries, including Bangladesh, were in crisis as a result of higher food prices and will require external assistance.
The WB reports, however, revealed that food prices have increased globally in response to many factors -- higher energy and fertiliser prices, increased demand for biofuels, especially in the U.S. and the European Union; and droughts in Australia and other countries.
World grain stocks are at record lows and next year's prices depend on the success of the next harvest in the northern hemisphere, it mentioned.
Wheat prices (US$) have increased by 200 per cent, and overall food prices (US$) have risen by 75 per cent since the turn of the century, it said.
It further said adjusting for exchange rates and domestic inflation reduces the price increases faced by developing countries, but these increases are still severe for millions of poor consumers.
"The increases in grain prices are not caused by short-term supply disruptions, as is the normal case, and it will likely take several years for supplies to increase to rebuild stocks and allow prices to fall," a leading WB Economist, Don Mitchell, said.
The World Bank (WB) has cautioned that persistent increase in the prices of staple foods could be devastating for the poor people of Bangladesh, especially who often spend more than half their incomes on food.
"… A low-income family, say in Bangladesh, that might pay 20 cents for a kilogram of rice one year and 30 cents the next," the WB said.
It said: "For poor people who often spend more than half their incomes on food, unrelenting increases in the price of staples can be devastating."
While the urban poor are most affected, it is worth remembering that most rural people are buyers rather than sellers of food, the World Bank said, adding that there could well be severe effects for landless rural workers whose subsistence wages may not increase apace with food prices.
Referring to a recent statement of the UN Food and Agriculture Organisation (FAO), the report said 36 countries, including Bangladesh, were in crisis as a result of higher food prices and will require external assistance.
The WB reports, however, revealed that food prices have increased globally in response to many factors -- higher energy and fertiliser prices, increased demand for biofuels, especially in the U.S. and the European Union; and droughts in Australia and other countries.
World grain stocks are at record lows and next year's prices depend on the success of the next harvest in the northern hemisphere, it mentioned.
Wheat prices (US$) have increased by 200 per cent, and overall food prices (US$) have risen by 75 per cent since the turn of the century, it said.
It further said adjusting for exchange rates and domestic inflation reduces the price increases faced by developing countries, but these increases are still severe for millions of poor consumers.
"The increases in grain prices are not caused by short-term supply disruptions, as is the normal case, and it will likely take several years for supplies to increase to rebuild stocks and allow prices to fall," a leading WB Economist, Don Mitchell, said.