WORLD BANK URGES ACTION AGAINST RISING FOOD PRICES

Washington, February 3 (Reuters)- The world faces a broader trend of increasing food and commodity prices and more countries should wake up to the need to curb price volatility, World Bank President Robert Zoellick said on Wednesday.

In a phone interview from Berlin, Zoellick called on G20 global leaders to "put food first" to tackle the surge in prices and increased volatility threatening the poor and driving up inflation in developing countries, mainly in Asia.

"We are going to be facing a broader trend of increasing commodity prices, including food commodity prices," Zoellick told Reuters.

"This can put pressure but also create opportunities," he added, noting that developing nations could boost revenues by increasing food production to meet rising global demand.

He said increased consumer demand, especially for sugar and meat, in fast-growing emerging economies was a major factor pushing prices higher compared with the 2007-2008 crisis.

A mix of high oil and fuel prices, growing use of biofuels, bad weather and soaring futures markets pushed prices to record levels in 2007 and 2008, sparking violent protests in Africa.

Zoellick said the Food Price Index of the UN Food and Agriculture Organization, or FAO, which measures monthly prices changes for a food basket of cereals, oilseeds, dairy, meat and sugar, showed food prices surging to above 2007-08 levels.

Higher food prices are set to push the index on Thursday to a record high in January for a second straight month.

The higher prices, together with political repression and growing inequality between the rich and poor, have fanned protests across the Middle East, including Egypt, Tunisia, Yemen, Algeria and Jordan.

In the run-up to the 2007-2008 food price crisis, the World Bank estimated that some 870 million people in developing countries were hungry or malnourished. The FAO estimates that number has increased to 900 million.

"We believe that while there are differences from the 2008 period, one core policy issue that is the same is that it looks like it will be a very tough year for the chronically malnourished," Zoellick added.

GLobal solutions needed

The higher food and energy prices have stoked inflation in Asia, including Indonesia, South Korea and Thailand.

With French President Nicolas Sarkozy making commodity price volatility and reforms of the international monetary system his priorities for France's presidency of the G20 group of leading economies this year, Zoellick said it was important to come up with practical solutions to ensure people have access to nutritious food.

"2008 should have been a wake-up call, but I'm not yet sure all the countries in the world that we need to support this have woken up to it," Zoellick said.

While calling for tougher regulation to head off the risk of food riots or slower economic growth, Sarkozy has also focused on improving physical market data.

Zoellick wants the G20 to recognize a larger role for development banks, such as the World Bank, in changes dealing not only with the immediate needs of poor countries faced with higher food prices, but in improving agricultural productivity.

He said politicians in rich countries did not always recognize the political and economic challenges higher food prices posed to developing countries.

More expensive food can be disastrous to the poor because three-quarters of their income is spent on basic foodstuffs.

Food prices also typically account for about one-third to one-half of a consumer price index in developing countries. In developed countries, food makes up a small portion of the CPI.

Zoellick said the World Bank had reactivated its emergency financing facility for poorer countries dealing with the effects of higher food prices, although the impact on African countries of the latest increase has not been as severe.

He said concerns among African governments would grow if oil prices rose enough above their current levels to affect the cost of food transportation and fertilizers.

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