World food prices jumped 10 per cent in July as drought parched crop lands in the United States and Eastern Europe, the World Bank said in a statement urging governments to shore up programs that protect their most vulnerable populations.
From June to July, corn and wheat prices rose by 25 per cent each, soybean prices by 17 per cent, and only rice prices went down, by four per cent, the World Bank said on Thursday.
Overall, the World Bank’s Food Price Index, which tracks the price of internationally traded food commodities, was 6 percent higher than in July of last year, and one per cent over the previous peak of February 2011.
U.S. soybean futures hit a record high of $17.78 per bushel in trading on Thursday, while corn futures remained near the record of $8.49 set earlier this month (all figures US$).
"We cannot allow these historic price hikes to turn into a lifetime of perils as families take their children out of school and eat less nutritious food to compensate for the high prices," World Bank Group president Jim Yong Kim said. "Countries must strengthen their targeted programs to ease the pressure on the most vulnerable population, and implement the right policies."
"Africa and the Middle East are particularly vulnerable, but so are people in other countries where the prices of grains have gone up abruptly," Kim added.
A severe drought in the U.S. has sharply cut corn and soybean yields this year, while a dry summer in Russia, Ukraine and Kazakhstan has hurt wheat output.
The World Bank said its experts do not foresee a repeat of 2008, when a food price spike triggered riots in some countries.
"However, negative factors — such as exporters pursuing panic policies, a severe El Nino, disappointing Southern hemisphere crops, or strong increases in energy prices — could cause significant further grain prices hikes such as those experienced four years ago," the bank said.
Separately, finance ministers from the 21-member Asia Pacific Economic Co-operation (APEC) group issued a statement at their meeting on Thursday in Moscow urging countries "to avoid export bans" in response to food price concerns.
APEC member Russia imposed a temporary embargo on grain exports two years ago after crops failed.
APEC leaders are expected to address food security concerns when they meet next week in Vladivostok.
"I think this is one of the areas where APEC member economies can really work together… to ensure the inflationary results of drought do not impact the poorest and most disadvantaged people in the world," a U.S. State Department official told reporters on Wednesday.
But Colin Roche, a spokesman for the development group Oxfam International, said it was not clear whether governments were prepared to take action "before prices spiral out of control and push more people into hunger."
The group of 20 leading economies has delayed any decision on joint action until after the U.S. Agriculture Department’s September estimate of this year’s harvest.
"This ‘wait and see’ attitude is unacceptable especially when the World Bank report has warned that prices are expected to remain high and volatile," Roche said. "Oxfam is already seeing the devastating impact of food price volatility in developing countries that rely on food imports."
— Doug Palmer covers international trade issues for Reuters in Washington, D.C.