Food Prices Decline but Still High and Close to Historical Peaks

March 27, 2013

Overweight and obesity continues to be a global epidemic even in times of high food prices

WASHINGTON, March 27, 2013 - Global food prices continued to decline for six consecutive months, but still remain very high and close to their historical peaks. The persistently high and volatile food prices not only influence conditions of hunger and undernutrition, but also obesity which may increase in the context of high prices as people opt for cheaper, less nutritious food to feed their families, the World Bank Group’s quarterly Food Price Watch report said.

Unhealthy food tends to be cheaper than healthy ones, like junk food in developed countries. When poor people with some disposable income in developing countries try to cope with high and increasingly volatile food prices, they also tend to choose cheap food that is high in calories but without much nutritious value,” said Otaviano Canuto, World Bank Group’s Vice President for Poverty Reduction and Economic Management. “Half of the world's overweight people live in just nine countries -- China, United States, Germany, India, Russia, Brazil, Mexico, Indonesia, and Turkey -- evidence that obesity is not an epidemic restricted only to rich countries.

According to the latest edition of the Food Price Watch, global food prices continued to fall between October 2012 and February 2013 - a trend observed since the recent all-time peak in August 2012 - but prices were only 9 percent below the August peak. Lower demand from a sharp fall in the use of wheat feed and reduced maize consumption for ethanol in the United States pushed prices down. Reported favorable weather conditions in some regions have also raised hopes of better crop supply for 2013.

But uncertainties remain. Global stocks of cereals dropped by 3 percent in 2012, mainly due to the decline in wheat stocks and coarse grains. The continued dry conditions in Argentina, South Africa and Australia also cast doubts over supplies in the coming months. Oil prices have been on the rise for three consecutive months, marking its highest level in February since April 2012. Stronger demand from Mexico, Indonesia, South Korea, Turkey, and possibly China may pressure the market.

In the “new normal” of high and volatile food prices, millions will continue to suffer from poor nutrition, whether it is hunger, undernutrition or obesity which can cause premature death. In 2008, the number of overweight adults was 1.46 billion, of which 508 million were obese. Even conservative estimates see that number rising to 2.16 billion for overweight adults and nearly doubling to 1.12 billion for obese by 2030 across all regions and in countries like China and India.

Despite the gravity of the problem, it is not evident that reducing obesity is among the top global policy priorities, the report said. Responses to the obesity epidemic have ranged from doing nothing to trying to promote healthier behaviors through taxes, bans or restrictions on certain foods and awareness campaigns. There have also been extreme cases in Japan where fines have been imposed to employees exceeding certain waistline limits.  

“The discussions on the post-2015 Millennium Development Goals, along with the UN high-level meeting on the prevention and control of non-communicable diseases offer an unprecedented opportunity for integrated global and national collective action to fight all forms of malnutrition, from stunting to obesity,” Canuto said.

How the World Bank is helping

  • Investment in agriculture and rural development is a priority for the World Bank Group, which boosted agriculture and agriculture-related investment to over $9 billion in FY12. IBRD/IDA assistance in FY12 was the highest in 20 years.
  • In response to drought in the Horn of Africa, the WBG is providing $1.8 billion to save lives, improve social protection, and foster economic recovery and drought resilience.
  • IFC will invest up to $2 billion in the Critical Commodities Finance Program, aimed to support trade in key agricultural and energy-related goods, to help reduce the risk of food and energy shortages, as well as improve food security for the world’s poorest.
  • A first-of-its-kind risk management product provided by the IFC will support protection from volatile food prices for traders and food processors in developing countries, keeping the essential food trade flows active.
  • The Bank is supporting the Global Agriculture and Food Security Program (GAFSP), which is a $1.5 billion program to address hunger and rural poverty in low-income countries. GAFSP is financed by 10 donors and is active in 28 programs in 18 countries focusing on increased incomes, higher agricultural productivity, improved nutrition, and gender empowerment.
  • The Global Food Price Crisis Response Program (GFRP) has reached 66 million people in 49 countries - through $1.56 billion in emergency support. From July 2012 onwards the Bank’s emergency response is channeled through IDA’s Crisis Response Window and the recently approved Immediate Response Mechanism that will provide basis for emergency assistance in the future. 
  • Boosting IBRD/IDA allocations to safety nets (rose six fold from $1.2 billion in the FY06-08 pre-crises period to over $10 billion in FY09-12).
  • The WBG is coordinating with UN agencies through the High-Level Task Force on the Global Food Security Crisis and with non-governmental organizations, and is supporting the Partnership for Agricultural Market Information System (AMIS) to improve food market transparency and help governments make informed responses to global food price spikes.
  • Advocacy for more investment in agriculture research–including through the Consultative Group on International Agriculture Research (CGIAR) – and monitoring agricultural trade to identify potential food shortages.
  • Supporting improved nutrition among vulnerable groups through community nutrition programs aimed at increasing use of health services and improving care giving. As part of its response to the food crisis, the Bank has supported the provision of some 2.3 million school meals every day to children in low income countries.
  • The Scaling Up Nutrition (SUN) Framework for Action to address under-nutrition was endorsed by over 100 partners, including the World Bank, as a part of the Scaling Up Nutrition movement.
  • Improving global collaboration in the generation and sharing of knowledge between agriculture, food security, and nutrition, through the SecureNutrition knowledge platform:
  • IFC has launched the Global Irrigation Program (GIP), providing support to irrigation suppliers to increase availability and access for efficient irrigation equipment to better manage water use for agriculture.


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