July 1, 2015

Between August 2014 and May 2015, world food prices have fallen by 14% to a five-year low, according to the latest Food Price Watch report issued by the World Bank.

Contributing to the abundant supplies of food in 2014 was the low price of oil resulting in low fertilizer and transportation costs, and the outlook for bumper wheat, rice, and corn crops in 2015 has been putting significant downward pressure on international food prices.

Wheat prices fell by 18% between August 2014 and May 2015, while rice prices fell by 14%, and corn prices fell by 6% during that time period. More recently however, the re-emergence of an El Niño weather pattern, the strengthening of the U.S. dollar, the demand for corn by the biofuel industry, shifts in rice support policies, and a hike in oil prices could work to drive up food prices once again within the coming months. Because of these mitigating factors, it is important that food supply-sensitive countries are prepared to deal with threatening food price hikes if the eventuality arises.

“Unexpected domestic food price fluctuations remain a possibility so it is crucial that countries are prepared to address dangerous food price hikes when and if they unfold,”says Jose Cuesta, Senior Economist, Poverty Global Practice at the World Bank Group.

Overall grain prices remained basically stable or declined slightly between August 2014 and May 2015 because of ample supply. However, countries such as Malawi, Zimbabwe, and northeastern Nigeria that were facing conflict, floods, drought, or a health crisis such as the Ebola outbreak, saw food prices increase.

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