Food security usually becomes the casualty in the event of any crisis, be it financial or political. It is not unusual for the recent global financial crisis to invite concerns from ogranisations like FAO and other food policy groups.
The global meltdown in the financial and equity markets follows hard on the heels of soaring food price and energy crisis caused primarily on account of intensified bio-fuel programme. The global commodity prices, though still ruling high, has marked a dip due to good harvest in the current season. According to the latest issue of FAO?s Crop Prospects and Food Situation report, global grain production this year is forecast to increase 4.9% to a record 2,232 million tonne. However, some 36 countries are still in need of external assistance as a result of crop failures, conflict or insecurity or continuing local high prices, the report noted.
Commodity prices have dipped in recent times as investors have apprehended recession. Wheat futures for December delivery closed at $5.1625 on Friday?down 62% from a record set in February. Corn futures dipped 53% from their all-time high and soybean futures registered 47% lower.
Commodity prices are currently declining, mainly on the expectation of favourable crop prospects but also due to the threat of a global recession. The FAO director-general, Jacques Diouf fears that borrowing, bank lending, official development aid, foreign direct investment and workers? remittances may be compromised by a deepening financial crisis. The impact of the financial crisis may also be felt in developing countries at the macro level with potentially negative impact on agriculture and food security. The falling grain prices may cause lower investment in agriculture and shrinkage in crop area and reduced harvest in major exporting countries. Given the low grain stock, this situation can lead to another turn of record high food prices next year.
According to FAO, 923 million people were seriously undernourished in 2007. Oxfam estimated that soaring food prices had pushed an extra 119 million people into hunger. The former UN secretary general, Kofi Annan has rightly warned the world leaders that global financial crisis should not be used as an excuse for inaction in the worsening battle against wrenching hunger across the developing world. The world now has the responsibility of fulfilling the Millennium Developmental Goals (MDGs) by lifting nearly one billion people out of poverty, who do not have enough food to eat on a day-to-day basis.
Despite the writing on the wall the world leaders have expressed scant regard for food security problem. Only $12.3 billion had been pledged by nations in Rome earlier this year for meeting the emerging food security problem, out of which $1 billion has been disbursed. Comparatively, the response to the current financial crisis was quick and prompt. The US administration has planned a $700-billion bailout package for its ailing financial sector. Governments and central banks across the globe are infusing billions of dollars into the system and cut in interests rates is being contemplated with a view to revive the ailing economy. Had the world leaders thought of infusing such an amount for directly eliminating poverty the MDGs could have be achieved at ease.
At the sidelines of the 7th Asia-Europe Meeting (ASEM) in Beijing last week, China, Japan and South Korea decided to speed up the establishment of a $80-billion fund to fight off currency speculators. The ASEM+3 decided to have a meeting of their finance ministers and central bank governors in Manila next month to finalise concrete proposals for handling the financial crisis, which would be discussed at the summit meeting in Bangkok in December, this year.
A study made by Merrill Lynch & Co under the team leader Francisco Blanch shows that such an attempt being made to restore artificial health to the ailing economy may fuel inflationary trend in prices ? a situation likely to have adverse impact on food security.
Subprime meltdown, downturn in the equity market, intensification of bio-fuel programme leading to use of food for fuel and consequent rise in food prices, speculation in commodity futures, fluctuations in currency exchange rates, the threat of recession, increasing corporate monopoly over the farm sector and willful distortion in global farm trade have collectively endangered food security.
This is the time to think of an alternative model of development as several experts have pointed out. The United Nation?s latest World Economic and Social Survey (WESS) released a week before the G8 Summit has noted that the belief in the self-regulating market was no longer credible. Hope the current global crisis would lead to a new order.