A section on global food markets contained within a special commodity markets feature in the International Monetary Fund’s (IMF’s) latest ‘World Economic Outlook’, published in April, caught my eye.

The report notes that food prices declined during the second half of 2011, broadly in tandem with cyclical commodity prices, while global food inventories started to be rebuilt in 2011, owing to favourable harvest outcomes.

The report indicates that the weather pattern known as La Niña, which is associated with drought in South America and excessive rain in Asia, probably represents the most prominent risk to food supply for 2012. But recent reports suggest that the La Niña phenomenon weakened during March, with Australia’s Bureau of Meteorology announcing towards the end of that month that key ocean and atmospheric indicators had returned to neutral.

The United Nation’s Food and Agricultural Organisation’s latest Food Price Index (FFPI) reinforces this relatively benign food- market outlook.

The index averaged 216 points in March 2012, virtually unchanged from 215 points in February. The FFPI, which measures the monthly change in international prices of a basket of food commodities, indicated that only oils prices showed strength in March, compensating for falling dairy quotations. The indices for cereals, sugar and meat prices were largely unchanged from February.

However, the IMF report makes another more worrying point. It notes that global food demand continues to grow at a robust pace, while food inventories have remained well below the average level over the past four decades in terms of stock-to-use ratios, especially for corn and rice. For this reason, vulnerability to adverse weather events and other adverse supply shocks “remains a concern”.

In other words, the world remains vulnerable in this area. In fact, the report even cautions that the legacy of the decline in global food inventories during the years before the 2007/8 global food crisis remains present.

That’s a concern, because if one casts one’s mind back to that period, some frightening memories will no doubt surface.

As former World Food Programme executive director Josette Sheeran recalled earlier this year, a number of events converged to result in the most rapid increase in food prices on record, with some prices doubling in only six months.

“This was the world’s first globalised humanitarian disaster, fuelled by radical interconnectedness in which an event in one corner of the globe overnight played out in every village on earth,” she said.

Serious efforts should, thus, be made during this relatively benign period to create buffers against any future food shocks.