The cost of corn and soybeans soared to all-time heights in July, pushing global food prices up by 10% and stretching budgets to the breaking point in the Middle East and Africa, the World Bank said in a new analysis released this week.
Punishing droughts and dry summers in the United States, Russia and India are the cause, the global organization said in its report. The weather has decimated summer crops, with ripple effects felt strongly across the globe. Corn has been selling for more than $300 per metric ton, twice the price as two years ago; soybeans have doubled to more than $600 in five years.
The rising prices pose the biggest challenge in the Middle East and Africa, where imported food plays a big role and the poor spend a large chunk of their money on food. In the Southeast Africa nation of Malawi, for instance, the cost of corn has shot up 174% since July of last year. Such a huge increase in prices is even more severe in a country where food purchases account for nearly half of all household expenditures.
“We cannot allow these historic price hikes to turn into a lifetime of perils as families take their children out of school and eat less nutritious food to compensate for the high prices,” World Bank President Jim Yong Kim said in a statement Thursday, pledging to keep its support for agriculture high. The bank devoted more than $9 billion last fiscal year to farming, it said.
The World Bank findings echo those of the United Nations’ Food and Agriculture Organization, which said in early August that surging grain, corn and sugar prices had driven up its food price index by 6% after months of decline. The bank pegged the increase even higher -- at 10% -- on its own index.
The meager crops of corn and soybeans are offset by a bumper crop of rice, the World Bank analysis said, but it’s unclear how the upcoming El Niño will affect food stocks in coming months. An intense El Niño could devastate wheat harvests in Australia, but could also boost corn and soybeans in South America, it said.
-- Emily Alpert in Los Angeles
Photo: Drought-damaged corn stalks Aug. 15, 2012, on a farm near Oakland City, Ind. Credit: Saul Loeb / AFP/Getty Images