The Food Price Index in October 2008 rose 28 per cent over October 2006.
Despite a sharp fall in international prices of cereals from their record levels in mid-2008, domestic food prices remain high in most developing countries, causing concern over poor people’s access to food.
Local food prices have failed to respond even to the various policy initiatives taken by the governments to tame prices.
This has been revealed in a review of national food prices carried out by the United Nations Food and Agriculture Organisation (FAO).
“Persistent high food prices in the developing world continue to affect access to food for a large chunk of vulnerable population in both urban and rural areas,” the FAO report said.
The analysis shows that the prices of major cereals in the international market have dropped by over 50 per cent from their peak levels in the middle of 2008, but they still remain high compared with previous years. The FAO Food Price Index rose 28 per cent in October 2008 from October 2006.
“In countries where the prices have declined, the reductions have been modest compared with those in export markets and, generally, national cereal prices remain above their levels of a year earlier,” the report maintains.
In fact, the drop in international prices in the present global economic scenario is being viewed with caution on another count. It can prove counter-productive and make food prices rebound again.
If lower prices and credit crunch associated with the economic crisis force farmers to plant less food crops, another round of dramatic upturn in food prices could be unleashed next year, an FAO official warned.
In India, despite a good crop this year and continuing export restrictions, the rice prices have increased since the beginning of the year. They climbed to Rs 22 a kg in some markets by November, reflecting an increase of 38 per cent from a year ago, the report said.
Similarly, in Pakistan, regardless of substantial wheat imports, the prices in October were well above their previous year’s level. The report also hints at substantial cross-border movement of foodgrain from Pakistan to Afghanistan, where prices of wheat flour are 70-100 per cent higher than in Pakistan.
In Sri Lanka, food prices have generally been on the rise since the beginning of the year. Despite the recently-harvested bumper crop, the prices in November were over 30 per cent higher than in the same month last year, said the report.
A notable feature of domestic food prices in the 101 developing countries included in the study is that they have defied the attempts by governments to bring them down through a series of policy measures taken between mid-2007 and mid-2008.
The most striking ones among these interventions include reduction or suspension of import tariffs and taxes (in 68 countries) and higher support to domestic production with agricultural inputs and credit (in 63 countries).
Besides, food assistance and other kinds of social safety nets were introduced, or reinforced, in 39 countries. Untargeted interventions, such as price controls and price subsidies, were made in 25 countries.
A large number of countries adopted more than one policy measure to respond to higher food prices, but the magnitude and coverage of the interventions, relative to the particular socio-economic contexts, differed greatly from one country to another, the report said.
“In general, policy interventions introduced to mitigate the impact of high food prices have reverted the economic liberalisation of past decades as governments have intervened heavily in food markets, introducing or increasing subsidies, while also putting a renewed focus on food self-sufficiency as a means to achieve food security,” the report concludes.
