The world’s poor face daunting realities amid worldwide food price spikes, which threaten local economies in the short term and impede long term economic development, an economist with the World Bank has told Xinhua.
In the face of food price hikes, families are forced to tighten budget and make cutbacks — fewer trips to local hospitals, fewer meals and less nutritious food, said Hassan Zaman, lead economist in the Poverty Reduction and Economic Management group at the World Bank, in a recent interview with Xinhua.
“Those are the consequences that poor families face and very difficult choices they face,” he said. “They typically start by cutting back on any type of luxury consumption so they can spend more on food. Once that’s exhausted, they may start skipping meals.”
Food prices have surged by 36 percent since a year ago, according to the World Bank, sparked by a combination of factors including severe weather, rising oil prices, export restrictions and government mandates to use biofuels.
Many people in poor and middle income countries already spend a sizable portion of their income on food — perhaps two-thirds or more — and when food prices jump, family budgets are squeezed even tighter.
Later, household budgets may be stretched further, and families move toward more serious cuts, such as selling off their assets. In Africa, that may mean selling cattle, an important means of income for many families on that continent, said Zaman.
“Once they start selling off their means of livelihood, that’s when you know they are in desperate trouble,” he said.
Currently, around 1.2 billion people worldwide live below the poverty line in low and middle income countries, and it is those families that suffer disproportionately, he said.
Indeed, an additional 44 million people fell into poverty since June 2010 because of high food prices, according to the World Bank.
Aside from the impact on families, rising food prices can spark ripple effects through local economies. When families spend more on food and have less money left over for, say, children’s school supplies, that could impact local businesses, he said.
After a year or two, however, wages shift upward as farms benefit from higher food prices. But over the long term there are concerns over the volatility of food prices, as they can hit poor consumers hard, as well as farmers, who may have trouble planning how much to produce and plant, he said.
CHILDREN HARDEST HIT
Of all those impacted by the food price spike, children rank at the top of the list.
“The evidence is that when there is a shortage of food or food prices go up and households switch from nutritious foods to less nutritious foods, children from the age of zero to two are the worst affected,” Zaman said.
“That is the age when you have to have nutritious food in order to grow up and be healthy. If you don’t have that sort of food at that time, you cannot just make it up later in life. So if you are unlucky enough to be in that age group when a crisis shoots up, you will suffer later on in life.”
Children can suffer in other ways as well, he said.
“If households are forced to take their kids out of school, then that’s their long run potential loss as well,” he said.
LONG-TERM SETBACKS
Even a food price spike that takes place over a two or three month period, in which a family’s food budget jumps from 70 percent to 80 percent of its income, for example, can be harmful.
“People have to eat regularly and on a daily basis, and especially kids don’t have those reserves and cannot say ‘well I’m just not going to eat for a couple of weeks and I will be fine,'” said Zaman.
The current food situation could also bring long-term setbacks in the developing world and amount to years of lost economic progress, he said.
Indeed, during the 2008 food price spike, the World Bank calculated that because an additional 100 million people fell into poverty, an equivalent of 7 years of poverty reduction gains were lost, he added.
by Matthew Rusling
WASHINGTON, April 26 (Xinhua) —