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Africa: Food Alarm and New Proposals
AfricaFocus Bulletin
Apr 13, 2008 (080413)
(Reposted from sources cited below)
Editor's Note
This is the season for economic reports, and, as usual, the message
is mixed. The World Bank and the Food and Agriculture are stressing
the structural crisis caused by rising food prices, and propose
some new remedies, both immediate and medium-term.
The Economic Commission for Africa (ECA) and the International
Monetary Fund (IMF) cite 2007 growth rates of 5.8% for Africa and
6.5% for sub-Saharan Africa, respectively. Both note, nevertheless,
that few African countries are on track to halve poverty by 2015.
The IMF predictably proposes a private-sector emphasis in response,
while the ECA lays out a wider range of actions.
This AfricaFocus Bulletin contains a press release from the World
Bank on the food price surge and the Bank's response, excerpts from
a speech by World Bank President Robert Zoellick, and a report on
new Food and Agriculture Organization proposals for changes in food
security operations and planning.
Another AfricaFocus Bulletin sent out today includes excerpts from
reports on Africa's economic outlook released by the UN Economic
Commission for Africa (UNECA) and the International Monetary Fund
(IMF).
For previous AfricaFocus Bulletins on food and agriculture, see
http://www.africafocus.org/agexp.php; on economic issues more
generally http://www.africafocus.org/econexp.php
For a current roundup of critical views on the "Green Revolution"
approach to Africa's food crisis, see Pambazuka News 361 "AGRA -
green revolution or philanthro-capitalism?"
(http://www.pambazuka.org/en/issue/361)
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Food Price Surge Could Mean '7 Lost Years' in Poverty Fight,
Zoellick Says
WB President Calls for Plan to Fight Hunger
April 11, 2008 - The crisis of surging food prices could mean
"seven lost years" in the fight against worldwide poverty, World
Bank President Robert B. Zoellick said.
"While many are worrying about filling their gas tanks, many others
around the world are struggling to fill their stomachs, and it is
getting more and more difficult every day," Zoellick said at a
press briefing on the eve of the IMF-World Bank Spring Meetings.
To meet this crisis, Zoellick is calling for a "New Deal on Global
Food Policy."
For the "immediate crisis," he urged governments to fill the US$500
million food gap identified by the UN's World Food Program.
Under the New Deal, the World Bank will nearly double agricultural
lending to Sub-Saharan Africa over the next year to US$800 million
to substantially increase crop productivity. In addition, the
International Finance Corporation - the World Bank Group's arm for
private sector development - will boost its agribusiness
investments.
Zoellick is also proposing that sovereign wealth funds around the
world allocate US$30 billion - one percent of their US$3 trillion
assets - to investments for African "growth, development, and
opportunity." At his press briefing Thursday, Zoellick said rising
food prices are also contributing to malnutrition, one of the
"forgotten" Millennium Development Goals.
"This is not just about meals foregone today or about increasing
social unrest. This is about lost learning potential for children
and adults in the future, stunted intellectual and physical growth.
Even more, we estimate that the effect of this food crisis on
poverty reduction worldwide is in the order of seven lost years. So
we need to address this not just as an immediate emergency but also
in the medium term for development.
"Meetings such as this are usually about talk. Words can focus
attention. They can build momentum. But we can't be satisfied with
studies and paper and talk. This is about recognizing a growing
emergency, acting, and seizing opportunity, too. The world can do
this. We can do this. We can have a New Deal on Global Food
Policy."
Zoellick said the poor spend as much as 75 percent of their income
on food. "In just two months, rice prices have skyrocketed to near
historical levels, rising by around 75 percent globally," he said.
The price of wheat has risen 120 percent over the past year, he
added. Over the past three years, food prices overall have risen 83
percent, the World Bank estimates.
"A Challenge of Economic Statecraft"
Robert B. Zoellick
President of The World Bank Group
Center for Global Development, Washington D.C.
April 2, 2008
...
The remarkable difference between this period of financial upheaval
and those in the past is the performance of developed and
developing countries. ...
Most important, there is something strikingly different about this
downswing: China, India, and other rising economic powers are
offering alternative poles of growth for the global economy. This
is not a "decoupling," because the interconnections of
globalization will transmit effects from the developed world's
financial problems and slowdown; it represents instead a welcome
diversification of the sources of growth. More than half of the
growth in global demand for imports is now originating in
developing countries, providing export opportunities for both
developing and developed economies. ...
There is a challenge of statecraft in times such as these: to
recognize the changing landscape, often as events and fate rush by,
so as to address pressing needs, while also planting seeds that may
become the supportive timbers of the future. ...
Therefore, I will highlight four immediate needs that also offer
longer-term opportunities. For each, I will aim for action.
High Food Prices: A New Deal for Global Food Policy
As financial markets have tumbled, food prices have soared. Since
2005, the prices of staples have jumped 80 percent. Last month,
the real price of rice hit a 19-year high; the real price of wheat
rose to a 28-year high and almost twice the average price of the
last 25 years.
The good news for some farmers adds a crushing load to the most
vulnerable - children, as young as four or five, forced to flee the
safety of their rural communities to fight for food in teeming
cities; food riots threatening societal breakdown; mothers deprived
of nutrition for healthy babies. The World Bank Group estimates
that 33 countries around the world face potential social unrest
because of the acute hike in food and energy prices. For these
countries, where food comprises from half to three quarters of
consumption, there is no margin for survival.
The realities of demography, changing diets, energy prices and
biofuels, and climate changes suggest that high -- and volatile --
food prices will be with us for years to come.
We need a New Deal for Global Food Policy. This New Deal should
focus not only on hunger and malnutrition, access to food and its
supply, but also the interconnections with energy, yields, climate
change, investment, the marginalization of women and others, and
economic resiliency and growth. Food policy needs to gain the
attention of the highest political levels, because no one country
or group can meet these interconnected challenges.
We should start by helping those whose needs are immediate. The
UN's World Food Program requires at least $500 million of
additional food supplies to meet emergency calls. The United
States, the European Union, Japan, and other OECD countries must
act now to fill this gap - or many more people will suffer and
starve.
Skyrocketing food prices have increased attention to the larger
challenge of overcoming hunger and malnutrition, the "Forgotten"
U.N. Millennium Development Goal (MDG).
Even though hunger and malnutrition fall under the very first MDG,
beyond traditional food aid, they receive only about one tenth of
the resources appropriately directed to HIV/AIDS, another killer.
Yet malnutrition is the MDG with the greatest "multiplier" effect:
it is the largest risk factor for kids under five and the
underlying cause of an estimated 3.5 million of their deaths each
year. ...
This New Deal requires a stronger delivery system, to overcome
fragmentation in food security, health, agriculture, water,
sanitation, rural infrastructure, and gender policies.
A shift from traditional food aid to a broader concept of food and
nutrition assistance must be part of this New Deal. In many
cases, cash or vouchers, as opposed to commodity support, is
appropriate and can enable the assistance to build local food
markets and farm production. When commodities are needed,
purchasing from local farmers can strengthen communities. Funds
can buy micro-nutrients customized to locations. School lunch
programs draw children to classrooms, while helping healthy kids to
learn, and some offer parents food, too.
The World Bank Group can help by backing emergency measures that
support the poor while encouraging incentives to produce and market
food as part of sustainable development. Countries as diverse as
Bhutan and Brazil, Madagascar and Morocco, have feeding programs
for vulnerable groups. Mozambique, Cambodia, and Bangladesh
employ locally-selected public works programs in exchange for food
- developing roads, wells, schools, protections against natural
disasters, and forests. Others, such as China, Egypt, Ethiopia,
and Mexico offer cash transfers conditional on self-help steps -
sending children to school or preventive health checkups.
Countries also have to stop dangerous border barriers to the trade
in food, which put neighbors in need at greater risk and stifle
signals to stimulate more production.
We will work with countries, especially in Africa, and partner
institutions, to seize an opportunity from the higher demand for
food. Our World Development Report 2008, on Agriculture for
Development, points the way. We can help create a "Green
Revolution" for sub-Saharan Africa by assisting countries to boost
productivity throughout the agricultural value chain and help
small-holder farmers to break the cycle of poverty. We will
almost double our own lending for agriculture in Africa, from $450
million to $800 million, and can help countries and farmers manage
systemic risks, including through financial innovations to counter
weather variability, such as drought. We can offer access to
technology and science to boost yields.
The International Finance Corporation, or IFC, our private sector
arm, will scale up investment and advisory support to agribusiness
operations in Africa and elsewhere, including through working with
the Bank on land titling and productivity, local currency
financing, working capital, distribution and logistics, and support
for the intermediary services on which farmers must rely.
To be most successful, we will need to integrate and mobilize a
diverse range of partners - the FAO, WFP, and IFAD; other MDBs;
private donors such as the Gates Foundation; agricultural research
institutes; developing countries with great agricultural
experience, such as Brazil; and most of all, the private sector.
A New Deal for Global Food Policy will contribute to inclusive and
sustainable development. Poor, middle income, and developed
countries will benefit together. Income gains from agriculture
have three times the power in overcoming poverty than increases in
other sectors, and 75 percent of the world's poor are rural, with
most involved in farming. Almost all rural women active in the
economies of developing countries are engaged in agriculture. With
support, women can seize the opportunities of globalized food
demand.
Now or Never on a Global Trade Deal
The poor need lower food prices now. But the world's agricultural
trading system is stuck in the past. If ever there is a time to
cut distorting agricultural subsidies and open markets for food
imports, it must be now. If not now, when?
...
The solution is to break the Doha Development Agenda impasse in
2008. ... There is a good deal on the table. It's now or never.
It is an ambitious result: the cuts in tariffs in both agriculture
and manufactured goods will be through formulae that cut higher
figures more than through a straight percentage; higher farm
subsidies will also be cut more deeply.
...
[for full text see http://go.worldbank.org/SXBT18L1Z0]
Reversing the Resource Curse: Launching an Extractive Industries
Transparency Initiative ++
Today's high prices for energy and minerals, posing costs to some,
offer great opportunities to others in the developing world. Some
countries have used their natural resources as a springboard to
development, but for others this treasure can become a curse.
Both developed and developing countries have experienced the risks
of these sectors: "dual" economies that leave most citizens
excluded; corruption from licensing and sweetheart deals; volatile
returns that tempt officials and weaken sustainable budgets and
growth; the "Dutch disease" of exchange rates driven by resource
exports, harming broader-based trade and employment; resource
"rents" that fuel conflict among fortune-hunting factions; huge
environmental costs; and even a sense of loss of sovereignty as a
privileged few seem to benefit from the sale of "national
patrimonies."
The Extractive Industries Transparency Initiative, or EITI, was
launched by British Prime Minister Tony Blair in 2002, with the
commitment of African leaders in the Partnership for African
Development (NEPAD). ... Today, twenty-four countries are
implementing EITI - seventeen of them in sub-Saharan Africa.
But transparency of revenues is not enough. To help ensure that the
high prices of energy and mining resources translate into
improvements in the lives of the poor, we will work with our
developing country clients and other partners to expand the
transparency and good governance concepts of EITI both "upstream"
and "downstream" - framing an EITI++ as a comprehensive approach to
supplement the original project.
We are identifying steps to help extractive industries contribute
to sustainable development by addressing risks all along the value
chain. We will include the awarding of contracts, monitoring
operations, collecting taxes, improving resource extraction and
economic management decisions, better managing price volatility,
and investing revenues effectively in sustainable development. ..
[for full text see http://go.worldbank.org/SXBT18L1Z0]
A "One Percent Solution" for Equity Investment in Africa
The rising economies of China, India, Brazil, and others have
strengthened and rebalanced the international economy, providing
new poles of growth. They are new "stakeholders" in globalization.
The Bank Group will also be alert to ways we can assist these
clients if the credit storm and liquidity drought sweeps their way.
We also have a larger strategic goal: We should make it possible
for the growth economies of Africa to become a complementary pole
of growth over the next 10 to 15 years.
We are devising a "One Percent Solution" for Equity Investment in
Africa to be a step towards the goal. Where some see sovereign
funds as a source of concern, we see opportunity. Today,
sovereign wealth funds hold an estimated $3 trillion in assets. If
the World Bank Group can create the equity investment platforms and
benchmarks to attract these investors, the allocation of even one
percent of their assets would draw $30 billion to African growth,
development, and opportunity. This one percent could be the start
of something much bigger, across more types of funds and countries,
because the investment of wealth into equity for development offers
opportunity, not something to fear.
Doubters may shake their heads. But consider the uncertainties of
China's and India's prospects in 1993. Five years later, the world
looked to China only to maintain currency stability amidst East
Asia's turmoil. Today, China and India are engines, still facing
complex and difficult problems, but driving motors of growth.
Goals that one day seem impossible, the next day can seem
inevitable.
What of Africa? Between 1995 and 2005, 17 countries of sub-Saharan
Africa, representing 36 percent of the population, grew on average
5.5 percent without the impulse of great natural resources; eight
oil producing nations, representing another 29 percent of the
people, grew on average 7.4 percent over that decade.
...
[for full text see http://go.worldbank.org/SXBT18L1Z0]
Yes, the sovereign funds need transparency and should be guided by
best practices to avoid politicization. But I believe we should
celebrate a possibility that government-sponsored funds will invest
equity in development.
...
This "One Percent Solution" is a pathway to include Africa in the
full gains of globalization. It is a strategy to strengthen the
globalized system, add sources of growth, and promote the
sustainability of globalization.
Eat Local Produce, Help Farmers, Says FAO
UN Integrated Regional Information Networks
http://www.irinnews.org
[This report does not necessarily reflect the views of the United
Nations
11 April 2008
Johannesburg
Rely more on local produce to cut food import bills and provide
subsidised inputs to boost production, advised the United Nations
Food and Agriculture Organisation (FAO) as it announced measures to
help poor countries, many of which will now have to pay 74 percent
more for food - up by US$6 billion from February 2008.
Under the Initiative on Soaring Food Prices (ISFP), FAO will
kick-off with short-term measures such as providing subsidised
fertiliser to boost food production in three African countries
affected by food riots - Burkina Faso, Mauritania and Senegal.
Mozambique, the fourth African country, included in the pilot will
use a blend of cassava and wheat flour to produce bread to help
lower the country's wheat import bill.
"The initiative will be rolled out in other countries in the second
phase," said Liliana Balbi, senior economist with FAO's Global
Information and Early Warning Service. Details of the second phase
were not announced.
World cereal stocks are expected to fall to a 25-year-low of 405
million tonnes in 2007/08, down 21 million tonnes, or 5 percent,
from their already reduced level of the previous year
The UN agency also announced the launch of Food Market Information
Units (FMIU) in countries worldwide to help monitor, collect and
analyse food prices to help humanitarian agencies and countries
come up with more nuanced responses to food insecurity and
vulnerability. FAO has allocated US$17 million towards the two
measures.
The sharp rise in international cereal prices, freight rates and
oil prices has pushed up the food import bills in many low-income
food-deficit countries in Africa, said the new FAO Crop Prospects
and Food Situation Report released on 11 April. World cereal stocks
are expected to fall to a 25-year-low of 405 million tonnes in
2007/08, down 21 million tonnes, or 5 percent, from their already
reduced level of the previous year.
Soaring price initiative
The ISFP pilot project will assist vulnerable farmers that are not
able to take advantage of high prices - because of insufficient
access to inputs - to increase local production, according to
Shukri Ahmed, Senior Economist at FAO. For example in Kenya, "the
greater disruption of markets, which followed the political unrest,
has produced an increase in the cost of agricultural inputs. As a
result, about half of the agricultural land in North Rift, the key
maize producing area, has not yet been prepared for the planting
season this month. The farmers in these situations need
assistance," he added
Fuel and food prices have also affected the cost of agricultural
production - "farm labour wages have gone up, inputs have become
more expensive," explained Ahmed.
International cereal prices have continued to rise sharply over the
past two months, reflecting steady demand and depleted world
reserves, the FAO report said. Rice prices increased the most
following the imposition of new export restrictions by major
exporting countries. By the end of March prices of wheat and rice
were about double their levels of a year earlier, while those of
maize were more than one-third higher, according to the report.
Despite governments' efforts to prevent the cost of food in their
countries from being influenced by soaring global cereal prices,
essentials such as bread, rice, maize products, milk and soybean
have continued to become more expensive.
The situation calls for alternative measures such as using what is
available locally to help lower food import bills, pointed out
Frans Van De Ven, FAO acting Resident Representative in Mozambique.
Mozambique which imports 100 percent of its wheat requirement
largely used to produce bread, will now experiment with cassava
flour, said Tatenda Mutenga, FAO's information officer in
Mozambique. After several studies including one on consumer
preferences, the UN agency along with the Mozambican government
will launch a project to manufacture bread using a blend of cassava
and wheat flour in the central Zambezia province in May 2008.
Price analysis
But the impact of soaring food prices on the vulnerable has also
highlighted the need for a comprehensive price analysis, which has
prompted the launch of FMIUs. "Food price inflation hits the poor
hardest, as the share of food in their total expenditures is much
higher than that of wealthier populations," said Henri Josserand of
FAO's Global Information and Early Warning system. "Food represents
about 10-20 percent of consumer spending in industrialised nations,
but as much as 60-80 percent in developing countries, many of which
are net-food-importers".
Differing foreign exchange rates, tax regimens and agricultural
policies require countries to come up with "individualised
responses" to global food price increases, pointed out Ahmed. "From
a UN agency's point of view, the units will help analyse for
example what impact a 20 percent increase in food prices would have
on vulnerability at global, regional, national and household levels
- and help us determine responses to improving food security."
According to FAO's first forecast world cereal production in 2008
is to increase by 2.6 percent to a record 2,164 million tonnes. The
bulk of the increase is expected in wheat, following significant
expansion in plantings in major producing countries.
"Should the expected growth in 2008 production materialize, the
current tight global cereal supply situation could ease in the new
2008/09 season," the report said.
But much will depend on the weather, FAO cautioned, recalling that
at this time last year prospects for cereal production in 2007 were
far better than the eventual outcome. Unfavourable climatic
conditions devastated crops in Australia and reduced harvests in
many other countries, particularly in Europe.
AfricaFocus Bulletin is an independent electronic publication
providing reposted commentary and analysis on African issues, with
a particular focus on U.S. and international policies. AfricaFocus
Bulletin is edited by William Minter.
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