November 17, 2008

Food crisis looms as world focuses on economic tumult


With capital markets across the world reeling and massive layoffs capturing the headlines, there's a worrying lack of attention to a looming food crisis and the growing number of the world's poor who are unable to feed themselves, according to food-policy experts working to alleviate hunger.


With food still expensive by historical standards despite wheat and corn prices having come down over 50 percent from March highs, they say major investment in agricultural technology and development is needed if the world is to avoid a new spike in prices that would put basic foods out of the reach of much of the world's population.


"We don't have stocks, no security against production disruptions," said Abdolreza Abbassian, secretary of the UN Food and Agriculture Organization's Intergovernmental Group on Grains.


"It may be next season or 10 years down the line, but (a new food crisis) will happen... and it will be much worse," Abbassian said.


And there are signs that this may happen sooner rather than later. Earlier this month the Food and Agriculture Organization, or FAO, issued a report warning that recent sharp declines in grain prices, tight credit and high input costs may cause farmers to cut back planting in 2009.


"If, indeed, production falls sharply next year, episodes of riots and instability could again capture the headlines," the FAO said in its latest Food Outlook report.


Surging food prices earlier this year led to angry protests across the globe from Italy to China.


"For the first time in 20-30 years, in 2008 we saw the actual total number of people undernourished go up," said Rajiv Shah, director of Agricultural Development for the Gates Foundation Global Development Program.


According to the FAO, "more people are likely to fall below the hunger threshold in 2008...and the number of undernourished was estimated to have risen by 75 million people in 2007, already, bringing the world total to 923 million."


Adding to these pressures is the need for the world's farmers to set new production records each year to simply maintain current per-capita food levels due to a 1 percent-to-2 percent annual growth in the world's population.


With increasing demand for grains coming from India and China, in addition to competition from biofuels for grain and cropland, the world's poor are tightening their belts even further.


The pain is most acute in nation's such as Bolivia, where a large share of the population already lives in or teeters on the brink of destitution.


"Bolivia has a long history of chronic hunger, and the effect of this rise and fall in prices could have severe repercussions on the poor," said Gonzalo Flores of Bolivia's Rural Development Group, or GDRU. "People are reducing the quantity and the quality of the food they eat."


Even before the recent spike in food prices, 3.2 million families - 36 percent of the total population - in Bolivia were living under extreme poverty, which is defined as the inability to afford the basic basket of food goods needed each month. But the number who can't afford the monthly food basket has grown by 392,000 over the last 12 months due to higher prices, Flores said.


Despite recent declines, prices for basic goods have remained high. Most grains are still up 20 percent to 30 percent, and rice is selling at twice 2006 levels, the FAO's Abbassian said.


Most analysts expect prices to stay elevated for the next 10 to 15 years, said Shah at the Gates Foundation.


"With world population racing towards 9 billion in 2050 and increased demand for meat and more grain-intensive food and with food being used for biofuel more actively, you have a lot of demand for total food commodities," Shah said.


Added to this is the compounding effect of slowing growth around the world and the increased poverty that will inevitably result.


High "food prices combined with the 2-3 year global economic recession is going to make the environment very, very tough for the poorest segments of the world's population," said Shah. "Compounded by the tight fiscal environments in many countries, donor governments, private foundations and others who generally work aggressively to eliminate hunger, it's going to be hard to increase the amount of resources available.


"It's a really a dire situation where precisely when people have been pushed back under the extreme poverty line, its going to be harder and harder to raise the resources needed to make a real difference in this problem," Shah said.


It is this lack of focus on the issue that is of most concern to those working on food-security issues.


"We are worried (and) wanted to be even a bit more alarmist" in the most recent Food Outlook report due to the drop-off in attention since the financial crisis hit, said Abbassian at the FAO.


"For the first time in four decades, agriculture made the front page, food became important, and investment in agricultural technology in the developing world became a priority," he said.


But the focus on investment in agriculture has been lost and "everything could be washed away and forgotten in a few months time - business as usual and we just carry on until the next crisis hits," Abbassian said.


"Climate is changing and those changes are making weather more volatile. Are we ready and what will we do if we get big variations in weather from one year to the next? It will certainly happen (and) we have done absolutely nothing."


Abbassian said that in in June it appeared that progress toward the goal of investment in agriculture was being made when world leaders pledged billions to develop agricultural technology, but he said that "very few of it, if any, has actually reached anybody."


"We're talking US$30 billion a year for food, while were talking about trillions for the current (financial) mess. It makes you wonder what kind of weight we put onto human life as opposed to the financial situation," he said.


"While the financial situation is critical, food is vital and was taken for granted because it was so cheap for so long," Abbassian said.

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