Rising Global Food Prices Likely to Continue, Say Experts

The Other Global Crisis: Rush to Biofuels is Driving Up Price of Food

April 12, 2008 by The Independent/UK - The world's most powerful finance ministers and central bankers are meeting in Washington tomorrow; but as they preoccupy themselves with the global credit crunch, another crisis, far more grave, is facing the world's poorest people.

A dramatic rise in the worldwide cost of food is provoking riots throughout the Third World where millions more of the world's most vulnerable people are facing starvation as food shortages grow and cereal prices soar. It threatens to become the biggest crisis of the 21st century

Urgent measures required to reduce impact of high food prices on the poor

9 April 2008, New Delhi – Urgent measures are needed to ensure that short-term adverse effects of higher food prices do not impact even more alarmingly on the very poor, FAO Director-General Jacques Diouf said today.

Addressing the first Global Agro-Industries Forum in New Delhi, along with the heads of UNIDO and IFAD, Dr Diouf highlighted the important role that agro-industry had to play in overcoming these problems.

"World food prices have risen 45 percent in the last nine months and there are serious shortages of rice, wheat and maize," Dr Diouf said.

"The problem is very serious around the world due to severe price rises and we have seen riots in Egypt, Cameroon, Haiti and Burkina Faso," says Jacques Diouf, director-general of the U.N.'s Rome-based Food and Agriculture Organization (FAO). "There is a risk that this unrest will spread in countries where 50 to 60 percent of income goes to food."

The FAO attributes rising food prices to a combination of factors, including reduced production due to climate change, historically low levels of food stocks, higher consumption of meat and dairy products in emerging economies, increased demand for biofuels production, drought and the higher cost of energy and transportation.

Diouf said at a major conference in New Delhi April 9 that world food prices have risen 45 percent in the last nine months and that there are severe shortages of rice, wheat and maize (corn). The FAO also has reported incidents of civil unrest in Indonesia, Cote de'Ivoire, Mauritania, Mozambique, Bolivia, Senegal and Uzbekistan over food prices.

The Washington-based World Bank estimates 33 countries face social unrest because of rising food and energy prices.

"The United States, the European Union, Japan and other OECD [Organization for Economic Co-Operation and Development] countries must act now to fill this gap -- or many more people will suffer and starve," World Bank President Robert Zoellick said in a recent speech. "Food policy needs to gain the attention of the highest political levels, because no one country or group can meet these interconnected challenges."

The United States remains the world's largest contributor of global food aid. The U.S. Agency for International Development operates the 54-year-old Food for Peace program to provide humanitarian food assistance to developing countries. In the fiscal year 2008 federal budget, the United States appropriated more than $1.4 billion for food aid programs. And the U.S. Agriculture Department and USAID are hosting their 10th annual International Food Aid Conference in Kansas City, Missouri, April 14-16 to address many of the more dire food shortage issues that have begun emerging in recent weeks across the globe. (See "Kansas City, Missouri, to Host International Food Aid Conference.")

President Bush has asked Congress for an additional $350 million supplemental appropriation to cover help for the Darfur region in Sudan and other needy areas.

In the recent case of unrest in Haiti, U.N. peacekeepers began removing barricades from around the presidential palace April 10 as calm began returning to the country's capital of Port-au-Prince and streets were being cleaned of debris following three days of violence and looting, all stemming from higher food prices. Rioters looted government warehouses and used rocks to attack shops, according to news reports. According to U.N. officials, the price of staples such as rice, beans, fruit and condensed milk has gone up 50 percent in the past year, while the cost of pasta has more than doubled in Haiti. U.N. Secretary-General Ban Ki-moon urged donor countries to provide emergency aid.

The World Food Program (WFP) appealed to the international community for urgent funds to support its operations in Haiti. "Riots in Haiti underline the additional need for lifesaving food assistance," WFP Executive Director Josette Sheeran said April 7. "At this critical time, we need to stand with the people of Haiti and other countries hardest hit by rising food prices."

In March, WFP launched an appeal for an additional $500 million to respond to dramatic increases in global food and fuel prices, which have risen by 55 percent since June 2007. The WFP says it has received only 13 percent, or $12.4 million, of the $96 million necessary to assist the 1.7 million people of Haiti.

"What we see in Haiti is what we're seeing in many of our operations around the world –- rising prices that mean less food for the hungry. A new face of hunger is emerging: even where food is available on the shelves, there are now more and more people who simply can not afford it," Sheeran says.

In Egypt, the government granted bonuses to workers after two days of riots over rising food costs and declining wages. "The security implications should also not be underestimated as food riots are already being reported across the globe," John Holmes, chief of U.N. humanitarian operations, told the Associated Press April 8.

A World Bank report said that global wheat prices increased 181 percent over the 36 months leading up to February 2008, and overall global food prices increased by 83 percent from a year ago.

"Food crop prices are expected to remain high in 2008 and 2009 and then begin to decline, but they are likely to remain well above the 2004 levels through 2015 for most food crops," the World Bank report said.

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