Monday, September 27, 2010

Food Price Stability today

The FAO held a meeting of 75 experts to reassure people that "there was no indication of an impending world food crisis." IFPRI said much the same thing last month.

Fires in Russia, an important wheat exporter, led to a 60-80% spike in wheat prices and 40% in maize. But the government policy of panic buying, hoarding, and closing exports has not been present this time around (other than in Russia).

Note importantly that while the "world" wheat price has jumped 60-80%, the price spike in low income food deficit countries is significantly lower: from 24% in Afghanistan to 8% in Pakistan for central Asia. Meanwhile, wheat prices remained stable in Latin America. Grain prices have gone DOWN in most of Africa (Sudan, Chad, and Niger being important exceptions).

So if the price in most countries in the world has gone up by less than 25%, in what sense of the word have wheat prices increased 60%?

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