Food Prices

India’s monsoon season is off to its weakest start in five years, sparking fears over the potential for drought and increased food prices throughout the country. During the first half of June, cumulative rainfall for India as a whole was 45 percent below average, according to the Ministry of Agriculture’s Department of Agriculture and Cooperation ; India’s Meteorological Department is predicting that total monsoons this season will reach only 93 percent of the long period average.

Food price volatility can present problems for an array of stakeholders, including countries managing their export portfolios, commodity traders, and especially farmers, as unpredictable prices may result in variable income and food insecurity.

Since the poor spend a greater share of their household incomes on purchasing food, higher food prices must exacerbate poverty, right? Wrong . . . at least over the medium term. In my most recent paper, I find that the opposite is true: higher domestic food prices predict reductions in poverty. The methods in this paper are fairly simple. I take World Bank national poverty estimates for a broad swathe of countries and regress changes in poverty against changes in domestic food prices (the ratio of the food CPI to the non-food CPI).

Concerns have been growing over how the ongoing political turmoil in the Ukraine, the world's third largest maize exporter, could impact global grain prices and reserves in the coming year. While Ukraine has delivered the majority of its current export obligations, continuing conflict could pose problems for next season's planting and harvest, and thus future export shipments. According to an article published by IRIN News, however, experts do not foresee a long-term impact on global grain prices.

Global food prices are becoming less volatile compared to recent years, according to a new FAO report. The November 2013 Food Outlook credits the more balanced markets to the recovery of global cereal inventories. 2013 has seen a significant increase in cereal production, largely based on increased maize crops in the US and record wheat crops in CIS countries.

Highlights for other crops include: