UN meet to discuss alarming food situation

Written by Sanjay Jog | Mumbai | Updated: Jan 23 2009, 06:02am hrs
Since the high-level Conference on World Food Security: the Challenges of Climate Change and Bioenergy held in June, 2008, at least two interrelated trends have affected the world food situationfalling international commodity prices and global financial crisis. Prices of major agricultural commodities fell around the world during the second half of 2008. Cereal prices fell by 37% from their peaks in April, 2008.

Nevertheless, prices remain high compared with the historical low point in 2002 and it is expected that they will remain above 2004 levels for most food crops until 2015. Mostly as a result of rising demand from economic growth in emerging economies. All these issues will come up for discussion at the UN conference on food security, scheduled for January 26 and 27 in Madrid.

According to a background paper prepared by the UN, international prices of basic food commodities have steadily increased since 2006, rose sharply throughout 2007 and during the first half of 2008 in particular. World food price jumped by 56% between 2006 and 2008 which affected millions of people, particularly consumers in net food importing countries in sub-Saharan Africa. The effects of increasing food prices contributed to riots and violent protests that erupted in over 25 countries in Asia, Africa and Latin America and the Caribbean.

High food prices threaten to reverse critical efforts made towards reducing poverty and hunger, as outlined in the Millennium Development Goals (MDGs), and risk pushing over another 100 million people below the $1-a-day poverty line. The most recent estimates from Food and Agriculture Organisation (FAO) indicate that another 75 million and 40 million people were thrown below the hunger threshold due to the impact of high prices in 2007 and 2008, respectively, bringing the total number of undernourished people to nearly 1 billion by the end of 2008. This alarming situation triggered a number of responses to the crisis in developed and developing countries. It re-emphasised the need to design consistent and coordinated strategies to deal with both the current crisis, as well as the underlying causes of chronic hunger, food insecurity and malnutrition.

Although the recent decline in world food prices partially reflects strong gains in production in 2008, other important factors such as the halving of world crude oil prices, financial crisis and appreciation of the US dollar have also contributed to this development. Most of the increase in production in 2008 has been in developed countries, while in the developing countries production increased only marginally. More production increases would be necessary to boost world reserves to comfortable levels. But the sudden decline in internationally traded food prices from their peaks in mid 2008 and the effects of financial crisis in the investment flows into agriculture may cause farmers to reduce their plantings (early signs of reductions in commercial plantings have already been evidenced), which will again increase the pressure on world food supplies and evoke greater price instability. Lower grain stocks in addition to increasing climatic shocks are expected to lead to greater price volatility. Volatility increases both consumption and production risk, reduces supply response, and is hard for the poor to handle either as consumers or producers.