Regional Countries Vulnerable To Food Price Hikes

Like two sides of the same worn coin, the spiraling costs of food stuffs across the globe have raised the spectrum of a new food crisis in some Caribbean countries while simultaneously benefitting most others in Latin America with windfall profits, said the region’s top World Bank officials.

A Bank assessment of the commodity spike states that since February 2009, international food prices have risen by more than 30 percent and agricultural raw material prices by more than six percent. During the same period, oil and metal prices have doubled.

“Virtually all the commodities that matter for the region are partaking in this strong wave of price increases. For certain countries the rise in non-food commodity prices can more than offset the increases in the prices of imported food,” says the report Vulnerability to Food Price Increases in LAC, 2011.

It said that clear winners from this situation are most South American countries.

Maize, soybean oil, and palm oil have registered the largest increases —over 7 percent per month in the September-November of 2010 period.

Gold, sugar, copper and coffee have experienced increases of more than 5 percent per month over the same period, dramatically improving the terms of trade of South American countries heavily reliant on such food and mineral exports such as Chile, Peru, Colombia, Brazil and Southern Cone nations.

But the World Bank said that left out of this bonanza are countries in Central America and the Caribbean where the Bank analysis found several countries highly vulnerable to a potential food crisis in light of their extreme dependence on food imports coupled with high poverty rates.

These countries include Haiti, Grenada, Jamaica, Suriname, and St. Vincent and the Grenadines.

A wider analysis taking into account high poverty rates combined with limited abundance of commodity exports -the lifeblood of most regional economies- expands such map to include Mexico, Guatemala, Nicaragua, Guyana and Belize.

The impact of higher food prices on the most vulnerable can be devastating, according to the report, which notes that already 44 million people have been added to the ranks of the poor globally since June 2010, following the food price spike.

“Sharply rising food prices may present a threat to the nutrition and livelihoods of vulnerable sectors of the population in the region. Food price inflation has a detrimental impact on net food consumers and particularly the urban poor, who spend a larger share of their income on food and do not derive their income from agriculture,” states the report.

While looming large in parts of the region, the threat of a food crisis can be effectively addressed with the right mix of social and fiscal responses, said the region’s top World Bank officials.

Beefing up social protection programs in the short term while improving long-term production and distribution of food stuffs can help governments avoid the pain of food shortages and price inflation says World Bank chief economist for Latin America and the Caribbean, Augusto de la Torre.

“The previous food crisis has highlighted the importance of continuing to strengthen safety nets for the poor in the region,” noted de la Torre.

He added that countries that have well-structured, long-term antipoverty programs, such as Conditional Cash Transfers (CCT), established before the crisis, can use them to protect the most vulnerable against shocks.

CCT leading practitioners such as Brazil, Chile, Colombia, El Salvador, Jamaica, Mexico, and Panama used their existing program structures during the 2007/8 food crisis by adjusting benefit levels and/or eligibility thresholds.

Source

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