It is encouraging that the Group of Eight countries have added the food crisis to the agenda of their July meeting. These powerful economies are not the hardest hit by the rising food prices of recent months, but they have a key role to play in helping those who are: poor countries dependent on food imports.
Even before the current dramatic price increases, an estimated 850 million people worldwide were chronically hungry. The World Food Program believes an additional 100 million people are now at risk.
Food riots that erupted in recent weeks in Haiti, Egypt, Indonesia and other countries may spread. The World Bank recently listed 33 countries at risk of social unrest due to rapidly rising food prices.
There are many causes of recent food-price inflation, and their relative weight is disputed: rising demand, skyrocketing oil costs, diversion of crops for biofuels, trade restrictions, commodity market speculation. But attention is now turning to what should be done.
So serious is the crisis that the UN this week set up a top-level task force on the issue. Both short- and long-term responses are required.
In the short term, there is an urgent need for food-aid funding. The WFP aims to feed 73 million of the world's most food insecure this year. With dramatically rising food prices, its ability to meet this goal is greatly diminished. The WFP has appealed for an additional $755-million to avoid having to ration food aid. It is imperative that the global community provide this funding. The United States recently pledged an additional $200-million worth of grain. The European Union announced the release of 160-million euros of its food aid budget for 2008. These pledges, from the world's largest food-aid donors, are welcome, but they are nowhere near sufficient.
The U.S. donation is tied to commodities grown in the U.S. which involves long lead times for delivery. This form of tied aid also has the potential to distort markets for grain in recipient countries. The EU donation is part of its already determined food aid budget for 2008, and critics charge it does not represent much additional money.
To date only 63 per cent of the WFP request has been pledged, and only $18-million in cash has been received. Canada is due to announce its pledge to the WFP this week.
It is imperative that donor countries ensure their contributions are additional funds. And the contributions should be in the form most useful for the WFP: cash. Cash enables the organization to purchase grains locally and regionally, stimulating rather than distorting farm economies in poor countries.
Over the longer run, there must be greater investment in agriculture in developing countries. Some blame developing-country governments for failing to invest adequately in their agricultural sectors over the past 20 years. But the agricultural policies of rich countries, especially the U.S. and the EU, have also had an enormous impact on agricultural sectors in poor countries.
Farm subsidies in rich countries have depressed global food prices in most years since the 1980s. These low world food prices have dampened production incentives for developing-country farmers. The result has been a gradual move toward food-import dependence, especially in the world's poorest countries. According to the UN Food and Agriculture Organization, the least developed countries were net agricultural exporters in the 1960s. Today, as a group, they are net agricultural importers.
In a bid to reinvigorate their farm sectors, developing countries have been pressing rich countries to reduce their farm subsidies through global trade talks. Suddenly, with the food-price spikes of recent months, the era of cheap food has ended, but not as a result of the trade talks.
The problem now is that food prices have changed too quickly. The urban poor are finding it difficult to pay the new prices, while rural farmers cannot respond quickly enough to the new production incentives.
A further problem is that poor, smallholding farmers will not necessarily benefit from higher prices because the costs of inputs and transportation are also rising. And in many cases, weak infrastructure in poor countries makes getting agricultural products to markets particularly difficult.
A recent intergovernmental report co-sponsored by the UN calls for a major overhaul of global agriculture. It advocates support for small-scale, sustainable farming systems, combined with subsidy reductions in rich countries. The current food crisis highlights the urgency of taking on these recommendations.
Creating an environment where poor farmers can gain in a world of higher food prices will take time and money, and at present we do not have much of either.
It is vital that rich-country governments recognize their part in creating the food vulnerability now faced by many developing countries. They must step up to the plate and provide the necessary assistance in both the short and the long term.