Tuesday, 21 October 2008

Food crisis in retreat, but 'major emergency' still exists (IHT)

By Laura MacInnisReuters
Sunday, October 19, 2008
GENEVA: At first sight, it seems like good news for those fighting hunger around the world: the spikes in commodity prices that set off food riots this year have been all but erased amid the recent financial turmoil.
But relief officials now have another fear: that distracted donors will forget that the problem goes much deeper, and stop devoting time and money to a food emergency that will only be worsened by a now-looming recession.
"There is no automatic correlation between what happens in the wheat futures market in Chicago and the price of wheat flour in Afghanistan," said John Holmes, the top UN humanitarian aid official, who also coordinates a task force on the food crisis.
International food prices hit nine-month lows in September and have since tumbled farther as investors pulled their money from turbulent markets. In the past three weeks alone, corn futures have fallen 32 percent and soybean futures 28 percent, according to Thomson Reuters data.
"What we fear is that people will look at those prices and think that the crisis is over," Holmes said. "We still regard it as a very urgent crisis and a major emergency."
Many food commodities are now trading at around half their peaks in June, when the United Nations called an emergency meeting in Rome to tackle a crisis that had sparked protests, strikes and riots in countries including Cameroon, Mozambique, Senegal, Haiti, Peru, Bangladesh, Indonesia and Afghanistan.
At that time, the UN World Food Program called costlier food a "silent tsunami" threatening millions with starvation.
Now, the program says lower prices mean it can afford better nourishment for the 90 million people it helps feed around the world. "We may be able to buy slightly more food for our beneficiaries," Emilia Casella, a spokeswoman for the agency, said.
The aid group Oxfam estimates that 967 million people worldwide now suffer from hunger - 119 million more than before high energy prices, biofuels, greater emerging market demands and speculation started to push up staple food costs.
Siwa Msangi, a research fellow at the International Food Policy Research Institute in Washington, said those stresses had not disappeared. "There has probably been less financial market activity involving commodities, due to the overall economic situation, and some consumer demand may have dropped off. But the longer-term drivers of upward price pressure are still there," Msangi said.
Donor governments at the UN's Rome summit meeting pledged $12.3 billion to help bolster agricultural productivity and encourage farmers to plant more, especially in poor countries where huge numbers of agrarian workers are moving to cities.
But only $1 billion of that has been paid out so far, as bank failures and market stresses have distracted governments.
Jacques Diouf, head of the UN Food and Agriculture Organization, said he feared that the financial crisis might cause international commitments to invest in seeds, fertilizers and other yield-bolstering technologies to "evaporate."
"The great uncertainty now enveloping international markets and the threat of global recession may tempt countries towards protectionism and towards reassessing their commitments to international development aid," he said.
Holmes said the UN food crisis task force would meet again in the coming weeks.
Rice, a staple in much of Asia, remains relatively expensive, with prices still up 15 percent this year. "The prices are shooting down because the demand is pulling back," Pavel Vavra, a trade and agriculture expert at the Organization for Economic Cooperation and Development, said. "Whether it is going to last is difficult to predict."

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