World Bank Fears Food Crisis, Ready to Step In

This year is likely to see a food crisis on-par with the one that the world faced in the year 2008 and the World Bank is ready to step in to help governments to reduce the impact of the volatile food market.

"When food prices rise, families cope by pulling their kids out of school and eating cheaper, less nutritious food, which can have catastrophic life-long effects on the social, physical, and mental well being of millions of young people," World Bank Group President, Jim Yong Kim said Monday.

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Short-term plans like school feeding programs, conditional cash transfers and cash-for-work programs will be implemented. Long-term plans are to have strong and stable policies and sustained investments in agriculture in poor countries need to be made.

"We cannot allow short-term food-price spikes to have damaging long-term consequences for the world's most poor and vulnerable," he added.

The 2008 food crisis was the result of a steep rise in the prices of rice and grain; the fall of which was caused by an increase in the supply, the following year. This food crisis is said to have been the reason behind the Arab Spring, and other riots around the world.

The fear of a repeat of the food crisis of 2008 is prompted by the drought sweeping the Midwest in the US, wilting corn and soy crops. Europe is plagued by persistent rains in some parts, and a complete lack of it in the Black Sea grain belt. A late monsoon in India also adds to the fears.

"In India, monsoon rainfall is about 20 percent below the long-term annual average. July is the critical planting month and there may be major negative implications if rains do not pick up," Kim said.

This year, the price of corn has risen by 45 percent, wheat by 50 percent and soy by 30 percent. These grains are not only important staple foods; they are also used as animal feed around the world.

Kim further added that food price volatility creates unpredictability in the market and poses fundamental food security risks for consumers and governments. The volatility also discourages needed investment in agriculture for development due to increased financial risks and uncertainty for producers and traders.