Fertilizer is to move front and centre of all this attention on food ...
Food inflation, riots stir concern
Bob Davis and Douglas Belkin | April 15, 2008
FINANCE ministers meeting in the US to grapple with the global financial crisis have also struggled with a problem that has plagued the world periodically since before the time of the Pharaohs: food shortages.
Surging commodity prices have pushed global food prices up 83 per cent in the past three years, according to the World Bank - putting huge stress on some of the world's poorest nations.
As the ministers met, Haiti's Prime Minister Jacques Edouard Alexis announced his resignation after a week in which that tiny country's capital was racked by rioting over higher prices for staples like rice and beans.
Rioting in response to soaring food prices recently broke out in Egypt, Cameroon, Ivory Coast, Senegal and Ethiopia. In Pakistan and Thailand, army troops have been deployed to deter food theft from fields and warehouses.
World Bank president Robert Zoellick has warned that 33 countries are at risk of social upheaval because of rising food prices. Those could include Indonesia, Yemen, Ghana, Uzbekistan and the Philippines. In countries where buying food requires half to three-quarters of a poor person's income, "there is no margin for survival", he said.
Many policymakers at the weekend meetings of the International Monetary Fund and World Bank agreed that the problem was severe.
"When millions of people are going hungry, it's a crime against humanity that food should be diverted to biofuels," Indian Finance Minister Palaniappan Chidambaram said in an interview. Turkey's Finance Minister Mehmet Simsek said the use of food for biofuels was "appalling".
James Connaughton, chairman of the White House's council on environmental quality, said biofuels were only one contributor to rising food prices. Rising prices for energy and electricity also contributed, as did strong demand for food from big developing countries like China.
But beyond taking shots at the US, there was little agreement on what should be done. Mr Zoellick pushed the ministers to focus on the food issue in a dramatic news conference at which he held up a 2kg bag of rice, which he said would now cost poor families in Bangladesh half their daily income.
Mr Zoellick had urged rich nations to contribute another $US500 million ($540 million) to the United Nation's World Food Program, but he said the UN had received commitments for only about half the money.
He kept up the pressure over the weekend. In a Sunday news briefing he said: "We have to put our money where our mouth is now - so that we can put food into hungry mouths." But the weekend's meeting produced few concrete results.
Meanwhile, the IMF's board of governors - basically, the world's finance ministers, who run both the IMF and World Bank - urged the IMF to work with the World Bank for "an integrated response through policy advice and financial support".
On Sunday, the committee that oversees the World Bank noted that "large groups of poor people are severely affected by high food and energy prices across the developing world".
The committee echoed the IMF's committee's call for "timely policy and financial support to vulnerable countries" and urged rich countries to be more generous in "immediate support for countries most affected by the high food prices".
The World Bank plans to nearly double its agricultural lending to Africa next year to $US800 million ($860 million), and is urging members to ramp up relief for hard-pressed nations.
Body: The World Bank, IMF and big industrialised nations also are pushing for the completion of the Doha global trade talks, though cutting food subsidies in the US and Europe under a trade deal would boost prices of food for impoverished importing nations.
Last week, British Prime Minister Gordon Brown urged the G7 nations - the US, Britain, Canada, France, Germany, Italy and Japan - to develop a comprehensive strategy for the food problem, encompassing trade, agricultural productivity, technology, biofuels and short-term aid for poor countries.
In the past, Britain has taken the lead in pushing the G7 to write off the debts of the world's poorest nations.
The situation in Haiti underscored some of the problems afflicting the world's poorest countries.
Haiti has enough food in the marketplace to feed its populace, but prices have increased beyond the means of many of the urban poor to pay for it, according to Michael Hess, an administrator in the US Agency for International Development's Bureau for Democracy, Conflict and Humanitarian Assistance.
"People are making two bucks a day," he said. "And we're seeing food prices go up around the world."
In the Philippines, the world's biggest importer of rice, a shortage of the grain has become acute. The Government is considering a moratorium on converting agricultural land to construction of housing developments and golf courses. The Government is also urging fast-food restaurants to offer half-portions of rice to slash the country's rice bill.
Aggravating the problem, in some countries food inflation has prompted a wave of protectionism. Countries usually impose trade barriers to imports to protect local industries and try to boost exports. But food-trade protectionism works the opposite way.
Recently at least a dozen of 58 countries surveyed by the World Bank have reduced tariffs to food imports and erected barriers to exports in hopes of restraining food prices domestically and moving toward "self-sufficiency".
India, home to more than half the world's hungry, is restricting grain exports, including a ban on the export of non-basmati rice. Taxes on edible oils, corn and butter have been decreased or eliminated.
Arvind Subramanian, a former senior IMF researcher, said that when countries adopted restrictive trade policies regarding food, "it becomes a bizarre kind of beggar-thy-neighbour. You're not trying to sell more to the other guy; you're trying to keep more in your own country".
With the international financial institutions working on a slow track, countries have been cutting their own deals. Ukrainian President Viktor Yushchenko said last week that he had agreed to let Libya grow wheat on 100,000 hectares of land in the Ukraine. In exchange, Libya promised to include the former Soviet republic in construction and gas deals.
Brazil recently invited Egypt's minister of commerce to discuss a possible trade deal which would have a strong agriculture component. China also cut its first free trade deal with a rich country, picking New Zealand, a major food exporter, and is talking about a pact with Australia, another big agricultural producer.
