Record high food prices are putting added pressure on the United Nations agency that helps feed nearly 100 million of the world’s poorest people, with officials warning of a potential “perfect storm” combination of soaring costs, weather emergencies and political instability.
If prices continue to rise, due in part to adverse weather such as floods, droughts and fires, or even stay at the same high levels for the rest of the year, UN’s World Food Program (WFP) will face a serious budget gap, forcing it to make the kinds of painful decisions it faced during the previous food price crisis of 2008: reduce rations, decrease beneficiaries, try to obtain additional resources.
Meanwhile for households already living at subsistence level, the rises mean increased levels of malnutrition, a decrease in income available for schooling or access to health services, and potential instability, such as bread riots, in those countries that are worst affected.
WFP’s forward purchase of food while market prices were relatively low in 2010 has helped to minimize the impact on its budget, but every 10 per cent increase in the price of its food basket, costs an additional $200 million a year to buy the same amount of food.
What may not be a food crisis in some parts of the industrialized world could be devastating to the 80 per cent of the world population that lives without food safety nets, officials stress, noting that people living in these nations are highly vulnerable and do not have the resiliency or cash to help them survive in highly volatile markets.
For example, the cost of wheat has almost doubled over the past six months and is continuing to rise, largely due to drought and fires in Russia in 2010, floods in Australia, and the imposition of export bans by producing countries. Wheat prices are still below the peak of the 2008 food price crisis, but if current trends continue, they will reach these levels. Oil prices have also passed $100 a barrel, the point where using maize for bio-fuel production becomes much more viable.