World Bank president Robert Zoellick warned leaders of the top global economies Saturday that the world is reaching a danger point where soaring food prices threaten further political instability.
“I mentioned that we are reaching a danger point,” Zoellick said, adding that he had urged G20 finance ministers and central bank chiefs meeting here to “put food first in 2011.”
Zoellick said rising prices would eventually result in increased food supplies but in the intervening couple of years, “there could be an awful lot of turmoil and governments could fall and societies could go into turmoil.”
Soaring food, fuel and other basic costs have been one of the key factors driving political unrest across the Middle East and North Africa which has forced the ouster of long-standing autocratic rulers in Egypt and Tunisia.
“We need to be sensitive and have a fingertip feel on what is happening in terms of food prices and its potential effect on social instability,” Zoellick told a conference call.
He said the international community needs to be ready to act quickly to help countries such as Tunisia to cope with economic shocks as they try to manage political transition.
The World Bank warned ahead of the two-day G20 meeting that food prices rose by 15 percent between October 2010 and January 2011, pushing another 44 million people into poverty.
France, which holds the presidency of the Group of 20 top developing and developed countries, has made reducing price volatility in basic commodities including food one of its key goals.
Zoellick said G20 ministers were receptive to some of the ideas the World Bank has proposed and that the meeting would provide further momentum for action.
“In sum, I’d say there is a list of items here that is very do-able and the best antidote to complaints that the G20 is a talk shop is to take real action. And action for the most vulnerable people is the best form of that.”
Zoellick said the situation is more concerning today than several years ago as there is increased demand from emerging markets and severe weather has reduced the ability of farmers to respond.
There have been proposals to slap limits on commodity trading to discourage speculative trading and reduce price volatility but the World Bank chief said “you counter volatility with better information” about the markets.
He said he also favoured a “code of conduct” for food export bans so as to ensure humanitarian food aid programmes are not affected.