Corn’s 60% Surge Is More Dangerous Than Euro Mess
If Jim Yong Kim was hoping for a honeymoon, the new World Bank president can forget it: To his headaches over Europe’s debt crisis he can add surging food prices.
Kim’s first month on the job was largely about gauging how Europe is affecting the plight of the poor. There are troubling signs that China and India are slowing, and that might leave Asia, which has the largest share of extreme poverty, devoid of growth engines.
That’s almost manageable compared with what’s confronting Kim in month No. 2: the worst U.S. drought in 56 years and dry weather in agricultural regions in India, Kazakhstan, Russia and Ukraine. Coupled with exploding demand for food, the phenomenon is causing violent commodity-price volatility at the worst possible time for Asia.
Rising food prices limit how much central bankers can cut interest rates to safeguard growth. More troubling would be the potential setback to poverty-reduction programs for decades to come.
The last food crisis began amid the 2008-2009 crash of the U.S. economy. In the second half of 2010 alone, according to the World Bank, some 44 million people were pushed back below the extreme poverty line, defined as those living on $1.25 a day or less. Asia is home to the bulk of those who spend between 60 percent and 80 percent of their paltry incomes on food.