Global food prices decline: where are the effects?

World food prices in the last six months seem to have followed a pattern. Flying just under the radar, FAO’s Food Price Index has fluctuated within a narrow bandwidth, staying under 215 points with tighter demand on the cereals front, keeping a lid on things in the short term.
Furthermore, a generally favourable outlook for wheat during the 2013 season cements the position of coarse grains, yields for which were brought down significantly post seasonal droughts in 2012.
But the patterns within the story remain the same. Staying close to historical peaks, the World Bank’s Food Index in February was only nine percent below the recent highs of August 2012.
Moreover, while prices for commodities such as Maize and Wheat shed six and 11 percent respectively during the time period between October 2012 and February 2013, they remain much higher than last year’s level, despite improved supplies with key exporting nations.
Oft discussed, the blame is passed onto a number of factors including rising input costs and a shift in plantations of stock for bio-fuel instead of food. But food security for those sitting in a developing country is much more than semantics of the when and the why.
Albeit consequential, the weather anomalies that saw the US breadbasket region turn to a crisp during the seasonal drought and the shift do not completely explain the significant shift in global food prices.
What has been termed as the “New Normal” of alarmingly high price levels is in all effect, more of a man-made situation than anything else. The prices of internationally traded food commodities continue to remain largely in the thrall of both supply and demand side uncertainties, which are at the mercy of policy interventions in crucial markets.
At home, the numbers tell all. The efficiency of the regulated price mechanism governing wheat procurement remains an open ended question. Although it has managed to entice farmers to increase wheat acreage in favour of other crops, the policy implications sit heavily on the heart of domestic prices even as the news of yet another bumper crop are circulating in the markets.
A 20 kg bag of wheat that cost a little more than Rs 200 in 2008 is today sold for Rs 600, a fact that adds serious weights to the concern of food security in a country where more than 20 percent of the population goes hungry despite the physical presence of sufficient nutritious food to feed them.