Bill Totten's Weblog

Monday, January 28, 2008

Will the food run out?

Observations on aid

by Tom Marchbanks

New Statesman (January 17 2008)

The weekly shop and the morning loaf of bread are becoming more expensive, but while most of us may barely have noticed, rising food prices are hitting the world's developing nations hard.

Global reserves of cereals are at an all-time low, mounting food costs have sparked riots in Mexico and there are hunger warnings across sub-Saharan Africa. A seldom-mentioned casualty of the price surge, though, has been the aid agencies, which are struggling to buy in food aid. With prices predicted to remain high, they are increasingly seeking new ways to feed the world's hungry.

The boom in global food prices, in part driven by demand for biofuels, is stretching resources at the UN's World Food Programme (WFP). Over the past five years, the agency's food procurement bill has rocketed by fifty per cent, according to Robin Lodge, spokesman for the organisation.

"There has been a cost increase across the board in major grains and pulses, such as maize, wheat and rice", he says. The escalating price of grains, described as agri-inflation among economists, has been rapid. The price of wheat, for example, doubled in 2007.

Paul Horsnell, head of commodities research at Barclays Capital, blames increased use of land for biofuels, reduced supply and an insatiable demand for food and animal feed from the world's emerging markets. "Biofuels, China and some poor harvests have been a recipe for a very sharp rise in grain prices", he says.

The WFP's finances are further hit by record oil prices. This impacts on grain prices by pushing up the cost of fertiliser and also adding to the agency's food-aid distribution expenses.

"Transport costs have soared over the past few years, adding enormously to our costs; also the rates shipping companies charge have increased. We are being hit all round", says Lodge.

The WFP's problems are unlikely to diminish since, in the long term, global warming will push up food prices, predicts John Ingram of Global Environmental Change and Food Systems, an organisation which monitors environmental change and food security. "Climate change is going to make things more difficult", he says.

The influences of climate change are already evident; as the US and Europe search for alternative carbon-neutral energy sources, land is diverted from food to fuel crops. "It's not rocket science to say that if you take land out of food production, the price of food will go up", says Ingram.

Another impact of global warming on the cost of food is the projected increase in extreme weather events, such as Australia's continuing drought and the serious floods of 2007 across Africa. The Intergovernmental Panel on Climate Change (IPCC) predicts that by 2100 we will experience heavier rainstorms, causing soil erosion and crop damage; droughts producing lower crop yields; and widespread soil salination from rising sea levels.

Responding to the growing crisis, Jacques Diouf, director general of the UN's Food and Agriculture Organisation, is demanding urgent steps to boost crop production. The UN agency is also seeking to address the problem from the other direction - by seeking means to prevent shortages, rather than simply managing them. "We look at ways of mitigation", says Lodge. "We are trying to increase farmers' yields by providing a ready market".

Handing out vouchers or small amounts of cash to stimulate local trade, rather than shipping in and distributing food aid, is one method increasingly used by the WFP. It has also started to buy directly from farmers, creating a stable market price that encourages production.

"World commodity prices are high, but this is not reflected at the farm gates. By being on the spot, we can guarantee a price", explains Lodge.

Nonetheless, the WFP is warning governments that if official development assistance doesn't keep up with rising food prices, the agency will be unable to maintain current levels.

"The bottom line is that if the donations remain static, we cannot feed all the people we are feeding at the moment. And unless donations go up, we may have to cut programmes", says Lodge.

Bill Totten


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