Adverse weather - food prices remain high
The price of rice declined between June and October 2013, but adverse
weather conditions may affect upcoming rice harvests in China and India.
Favourable weather conditions and improved production prospects have
helped sustain price declines to date. However, adverse weather and
uncertainties may affect price trends.
International prices of food continued to decline between June and
October, but remain high. The World Bank's Food Price Index decreased by
6% between June and October.
Despite steady declines in the past few quarters, prices remain high.
The Bank's Food Price Index was only 12% lower than a year ago and 16%
below the all-time peak in August 2012. The overall decline is mainly
driven by the prices of grain, which were 19% lower in October than in
June.
However, within the prices of grain, there is some variation. The
price of internationally traded maize fell by 32%, with sustained drops
in each of the last three months. Prices of rice (Thai 5%) also fell
markedly - but less - between June and October, by 16%.
In contrast, the international price of wheat increased. The increase
between June and October was 4%, with a sharp increase of 6% in October.
Despite an increase of 6% in the Bank's average price of crude oil
during this period, fertiliser prices have not increased.
Weather has played a role, alongside improved production prospects,
in sustained price declines. Favourable outlooks for the supply of
cereals predict record harvests for wheat, maize, and rice.
However, deteriorating weather conditions and other uncertainties
might further affect price trends. Bad weather in South America, Black
Sea countries, China and India particularly warrants concern.
This issue of the Food Price Watch also explores the role that
extra-large scale farming, popularly known as 'super farms' may play in
boosting agricultural productivity and poverty reduction.
The jury is still out on whether this trend has a positive or
negative effect on boosting shared prosperity, especially in those
countries with fragile institutions and poor oversight. Social,
environmental and animal welfare concerns must be weighed with
potentially promising benefits such as jobs and efficiency gains.
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