Global food prices to ease in 2012: World Bank

The World Bank expects global food prices to decline in 2012 due to sluggish global economy and expected decline in prices of energy and crude oil.

Increase in food supplies after good harvest in India, China, Australia and Argentina among other countries also helped easing of food prices, a World Bank report said.

"Prospects for decline in 2012 food prices remain favourable, due to weaker consumer demand as a result of a sluggish global economy, expected declines in the price of energy and crude oil and strong forecasts for 2012 food supplies," the multilateral agency said in a statement.

It, however, cautioned that upward food price pressures need to be monitored.

"Nevertheless some upward price pressures still remain. These include a possible increase in demand for biofuels if oil prices pick-up again, very low stock-to-use levels for maize, volatility in oil prices as a result of unrest in producer countries and weather changes.

"La Nina, for instance, has already made its presence felt in the Pacific Ocean and is expected to affect the growing season of maize and soybeans in Argentina and Brazil," it pointed out.

World Bank in its latest Food Price Watch for the September-December quarter of 2011, said global food prices have declined by 8 per cent due to increasing supplies and uncertain global economy.

While the first quarter of 2011 saw sharp increases, five consecutive months of decrease at the end of the year drove the World Bank Food Price Index 7 per cent below the December 2010 levels, and 14 per cent lower than its February peak, it said.

Nevertheless, global prices remain high with the 2011 annual index averaging at 210 points against 169 points average in 2010, the agency added.

The report said despite the downward trend over the last few months, global price of key staples continued experiencing volatility and the average annual prices of wheat, maize and rice well exceeded averages for 2010.

"A better-than-anticipated production of wheat from the Black Sea and winter harvests in Argentina and Australia, a good maize harvest in Ukraine," World Bank said.

Bumper rice harvests in China and India have compensated for bad harvests in the US and rice production losses in Thailand and other countries in that region, it added.

The response from rice exporters like India and Pakistan and maize exporters like Ukraine also helped fill the gap in world exports that followed the floods and the mortgage price scheme in Thailand and reductions in maize exports from the United States due to unfavourable weather, it said.