Food prices decline but remain high; consumer food subsidies increasing concern

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Workers stacking large sacks from conveyor belt. Pakistan. Photo: Curt Carnemark / World Bank

Global food prices declined for three consecutive quarters, then rose in May and June, remaining close to historical peaks, the World Bank Group's quarterly Food Price Watch reported Friday.

It says some countries with high poverty and weak safety nets are now responding to this chronic volatility by scaling up consumer food subsidies but these are often counter-productive.

World Bank Group's Acting Vice President for Poverty Reduction and Economic Management Jaime Saavedra said "Poorly designed food subsidy programs that lack transparency and accountability in implementation do not benefit poor people. These programs can be very costly and prone to corruption, and waste scarce fiscal resources."

He added that "Reforming such programs is a policy priority, leading the way to smart subsidies that target the most needed and complement existing safety nets."

According to the report, higher production, declining imports and lower demand generally pushed export prices down although international markets continue to be tight for maize (corn).

Looking ahead, the report says uncertainty in the international market remains. Recently unfavorable weather conditions in northern and central Europe, the Russian Federation and China may affect the prospects of a rebound in the world wheat production.

Donn Bobb, United Nations.

Duration: 1’12″

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