World Bank Report: Global Food Prices Show Rising Trend Food Subsidies Must Be Cautious

July 29, 2013 13:13 Source: China Economic Network-Economic Daily

the World Bank recently released the "Food Price Watch" that global food prices continued to fall between February and June 2013. However, in May, the downward trend in global food prices slowed down and a rebound was expected. Food prices are now only 12 per cent below their peak in August last year.

The report pointed out that the increase in production, the decrease in imports, and the decrease in demand have generally pushed down the price of grain exports, but the supply of corn in the international market is still tight. The report believes that the current price of wheat reflects the expectation that world wheat production will rebound, while rice prices continue to decline moderately due to the superposition of multiple offsetting factors. In addition, while bumper harvests in Thailand and Vietnam have led to lower food prices, rising demand and reduced supply in India, Pakistan, the United States and South America have put upward pressure on food prices.

The Bank report also suggests caution in the use of consumer food subsidies. According to the report, in response to long-term fluctuations in food prices, some countries with a large number of poor people and weak social safety nets have adopted the way of expanding consumer food subsidies, "but the results of this are often counterproductive." Jamie Saavedra, acting vice president of poverty reduction and economic management of the World Bank Group, said: "poorly designed food subsidy programs lack transparency and accountability in their implementation. It does not benefit the poor. These schemes can be costly and prone to corruption and waste scarce financial resources."

when talking about the future trend of international food prices, the World Bank report pointed out that uncertainty in the international market still exists. Unfavorable weather conditions in Northern and Central Europe, the Russian Federation and China could affect the prospects for a rebound in world wheat production, the report said. The situation in Egypt may also have an impact on the international wheat market, as Egypt is the world's number one wheat importer. In addition, multiple factors, including bad weather, declining supply, currency devaluation and public procurement policies, will continue to cause food price fluctuations. (Reporter Lian Jun)

(Original title: World Bank report believes that global food prices are rising food subsidies should be cautious)

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