What are the main factors behind rising food prices this year?
The biggest factor is the drought in the United States, which is probably the worst in 50 years. Production is at a six-year low and impacts food prices around the world. In South Africa, for example, the price of maize rose by about 25% in the month of July alone.
We’re seeing the price of wheat go up as well. That happens because when corn is expensive, people turn to wheat as a substitute. We’ve also had some bad weather in Russia this year, which is an important exporter of wheat.
- Arif Husain is Deputy Chief of the Food Security Analysis Service in WFP. He has a Ph.D. in agricultural and applied economics from the University of Minnesota and has written extensively on issues pertaining to food security, conflict resolution, economic development and environmental sustainability. __________________________
More on high food prices on wfp.org
What are the ramifications of this being the third food-price shock in just five years?
Many people in the countries where we work haven’t had time to recover from the last food price shock and neither have their governments. Moreover, all three shocks have occurred with a financial crisis unfolding in the background. That has eroded the ability of poor governments to respond while leaving people more vulnerable to the effects of rising food prices.
What lessons have we learned during the food price shocks in 2008 and 2010 and how will that affect the way we respond to rising food prices this year?
First of all, different countries are affected in different ways so we have to tailor our response to the realities on the ground. Second, price shocks don’t become crises overnight. The time in between must be spent wisely—preparing for the worst, but hoping for the best.
In good times, we need to invest in safety nets so that precious time isn’t wasted building them in the bad times. And we have to avoid easy, short-term solutions like panic buying and export bans.
What effect does it have in the lives of the people we help when the price of something like corn or wheat suddenly goes up?
The people we help spend from around two-thirds to three-fourths of their income on food. So they don’t have many options when prices go up.
They’re also more directly exposed. In the US, for instance, only about 14 cents out of every dollar spent on food goes to pay for the actual food commodity. The rest is spent on processing, packaging, transport etc. Even if the price of a commodity doubles, the price of the food product only goes up by a fraction.
In poor countries, people mostly buy the commodity itself. Any increase in the cost of that commodity is what families have to pay at the market. So even a small rise in the price of corn, for example, can have a big impact on a family’s food budget.
How do families cope when the price of a staple like corn rises suddenly?
People will start by skipping meals or eating cheaper, lower-quality foods. Then they’ll start cutting back on basic expenses. They may pull their children out of school or avoid going to the doctor even if they really need to.
If things get even worse, they’ll start selling off their assets—livestock, farming equipment, even their land itself. When that happens, it’s very difficult for them to get back on their feet.
How is WFP affected by rising food prices?
Every 10-percent increase in the cost of our food basket means that we have to spend an additional US $200 million to buy the same amount of food. We spent an extra US $755 million during the food price crisis in 2008 just to cover those rising costs.
For the same reason, during the food price shock in 2010, we bought 25 percent less food with the same amount of money than we had the year before.
So we have to spend more to buy food for the hungry just as more and more people need our assistance.
What can we do about that?
We need to monitor the situation to see how it’s affecting the people who live in vulnerable countries. We also need to help governments build and sustain their own safety nets.
That means a lot of different things from providing children with nutritious meals in school to cash voucher programmes which allow parents to buy food for themselves on the local market.
Crucially, it also means helping small famers become more productive and connect them to markets so that they can solve problems like these at the grassroots.
Portrait of Arif Husain by Rein Skullerud