Zoellick: Food Price Rises Aggravating Factor in Tunisia Egypt Protests


WASHINGTON (Reuters) – World Bank chief Robert Zoellick on Tuesday said global food prices have reached “dangerous levels,” and warned that their impact could complicate fragile political and social conditions in the Middle East and Central Asia.

World Bank data released on Tuesday showed higher food prices — mainly for wheat, maize, sugars and edible oils – have pushed 44 million more people in developing countries into extreme poverty since June 2010.

“There is no room for complacency,” Zoellick told a conference call. “Global food prices are now at dangerous levels and it is also clear that recent food price rises are causing pain and suffering for poor people around the globe.”

Zoellick said although higher food prices were not the main cause leading to recent protests in Egypt and Tunisia, it was an aggravating factor and could become worse.

He warned that a sharp rise in food prices across Central Asia could also have social and political implications for that region.

The World Bank report comes days before a meeting of the Group of 20 major economies in France where higher food prices and the reasons for those upward spikes will be discussed.

Zoellick also said he was concerned that as countries such as Egypt, Tunisia and Jordan address causes of their social upheaval, higher food prices may add to “the fragility that is always there any time you have revolutions and transitions.”

The World Bank chief said the international community needed to be aware of such risks and should not exacerbate problems by imposing policies, such as export bans or price fixing, that would push global food prices even higher.

“There is no silver bullet to resolving the potent combination of rising and volatile food prices,” Zoellick said, “but food security is now a global security issue.”

Catastrophic storms and droughts have hurt the world’s leading agriculture-producing countries, including flooding and a massive cyclone in Australia, major winter storms in the United States, and fires last year in Russia.
Zoellick said a World Bank team was currently in Tunisia taking a closer look at the country’s transition and assessing possible financing needs, including for food assistance.

He suggested that Egypt may not need World Bank funds because its financing situation “is one that should be able to be managed” over the short term.


The Washington-based poverty-fighting institution said its food price index increased by 15 percent between October 2010 and January 2011 and is just 3 percent below its 2008 peak during the last food price crisis. This translates into a 29 percent rise in food prices over the course of a year.
But unlike during the 2007-08 food crisis, higher prices have not yet affected all regions of the world.

Across Asia and in some parts of Latin America, Eastern Europe and Central Asia, costlier food is pushing up inflationary pressures.
“Central Asia is a region where these good prices have increased substantially and given the poverty levels … there is a real stress point that could have social and political implications,” Zoellick said.

Meanwhile, good harvests in Sub-Saharan Africa have so far spared that region from rising prices.

But he said it was disturbing to see maize prices soar about 73 percent over six months, while prices for sugar for fats and oils have risen 20 percent and 22 percent, respectively, in the past quarter alone.
The World Bank cautioned that rice prices needed monitoring given measures by some countries to significantly import more rice to boost domestic stocks.

He said there was less margin for error in Africa because of high poverty rates across the region, although he noted problems in Burundi and Cameroon where bean prices, an important food source, have risen by more than 40 percent.

Surveys show that the poor spend more than 80 percent of their total disposable income on basic foods, and if prices rise, poor families have few — if any — alternative but to eat less.

The bank said rich donor countries needed to focus food aid on countries such as Afghanistan, Democratic Republic of Congo, Kyrgyzstan and Mongolia, which face acute food price spikes.

The bank said the international community should take steps to calm jittery commodity markets and urged poor nations to scale up social programs to protect the poor.

It said countries that are large net commodity importers with low international foreign exchange reserves and limited space in their budgets may need funding help.

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