WASHINGTON, July 1, 2015 – International food prices decreased by 14% between August 2014 and May 2015, dropping to a five-year low, according to the latest edition of Food Price Watch.
Cheap oil contributed to abundant global supplies of food in 2014 and prospects of a bumper crop for wheat, maize and rice in 2015—factors that are driving the sharp decline in international food prices. The agriculture and food sector continue to benefit from less expensive chemical fertilizer, fuel and transportation costs brought on by the previous year’s oil price declines, with food prices holding steady despite recent oil price hikes.
Between August 2014 and May 2015, wheat prices plunged by 18%, rice prices dropped by 14% and maize prices declined by 6%. However, the arrival of El Nino, the appreciation of the U.S. dollar and the recent increase in oil prices could drive up food prices in the coming months. The demand for maize by the biofuel industry and developments in rice support policies among major producers are other factors that could impact food prices.
The decline in food prices is welcome, because more poor people can potentially afford to buy food for their families,” said Jose Cuesta, Senior Economist, Poverty Global Practice at the World Bank Group. “However, unexpected domestic food price fluctuations remain a possibility so it is crucial that countries are prepared to address dangerous food price hikes when and if they unfold.”
Domestic grain prices also remained mostly stable or declined between August 2014 and May 2015, due to abundant supply. However, food prices increased in Ebola-hit countries, as well as areas that were affected by conflict, floods and drought such as northeastern Nigeria, Malawi and Zimbabwe.
How the World Bank Group is helping
- The World Bank Group is committed to boosting agriculture and agriculture-related investment. In 2014, new commitments to agriculture and related sectors were $8.3 billion. For IBRD/IDA, assistance to agriculture and related sectors rose to $4.3 billion in FY14 from $3.6 billion in FY13.
- IFC made $4.0 billion in private sector investments across the food supply chain in FY14. These investments supported projects that promote access to finance, access to inputs like seeds, equipment and advice, and access to markets through infrastructure and food-processing facilities.
- Launched by the World Bank in 2008, the Global Food Price Crisis Response Program (GFRP) provides relief to countries hit by high food prices. The GFRP has reached nearly 70 million people in 49 countries—through $1.6 billion in emergency funds for farming, seeds and fertilizer, and emergency school feeding programs.
- The WBG supports the Global Agriculture and Food Security Program (GAFSP). Ten countries and the Bill & Melinda Gates Foundation have pledged about $1.4 billion with $1.2 billion received.
- Coordinating with UN agencies through the High-Level Task Force on the Global Food Security Crisis and with non-governmental organizations, and supporting the Partnership for Agricultural Market Information System (AMIS) to improve international food market transparency.
- Advocacy for more investment in agriculture research–including through the Consultative Group on International Agriculture Research (CGIAR) – and monitoring trade to identify potential food shortages.
- Supporting improved nutrition among vulnerable groups: During the past decade (2003-2013), the International Development Association (IDA), the World Bank's fund for the poorest, has ensured that more than 210 million pregnant/lactating women, adolescent girls, and/or children under age five were reached by basic nutrition services. The Bank is also an active member of the Scaling Up Nutrition Global Movement and leads the SecureNutrition Knowledge Platform, which aims to improve nutrition outcomes through increased nutrition-sensitive investments and activities across all key underlying drivers of nutrition.