Posted on 15 June 2008.
UN Summit on food crisis in Rome by DR.ABDUL RUFF Colachal
Food prices have been rising significantly for two years now, but it took the huge spike in prices that peaked in February this year to engage the world’s attention, as a realization of the scale of the crisis emerged in many countries. The impact of food price rises on trade balances is being discussed in all economic forums world over. Food costs are the highest in 30 years, causing riots in dozens of countries. The recent food and price crisis is believed to have pushed 100 million people into hunger worldwide. Poorer countries are faced with a 40% increase in their food imports bill this year, and experts say some countries’ food bills have doubled in the past year. Rising food bills have triggered protests, riots and panic buying in some developing countries. A lot of countries have to import more or less as what they did in the past. Secretary General Ban Ki-moon has called for the immediate suspension or elimination of price controls or other trade restrictions.
A key UN-sponsored summit on the world food crisis from took place in Rome, Italy from 3 to 5 June 2008 aiming at addressing the problem of soaring global food prices. The Conference on World Food Security: the Challenges of Climate Change and Bioenergy at FAO headquarters in Rome. The conference saw the participation of more than 181 countries representing donor countries, food producing countries, and those affected by the current food crisis and eight heads of international organizations. The UN Secretary-General Ban Ki-moon and Prime Minister Berlusconi of Italy co-hosted a high-level working dinner on June 03. Ahead of the conference, the Islamic Development Bank said at a meeting in Saudi Arabia that it would spend $1.5bn (£760m) over five years to help the least developed Muslim countries tackle the food crisis.
In its annual Outlook report, the FAO predicted prices of beef and related items might be 20% higher by 2017, wheat could be up to 60% more expensive and the cost of vegetable oils might rise by 80%. It is also concerned about the increasing use of crops for biofuels. Biofuels are the largest new source of demand for agriculture and are causing higher prices. The report days that higher food prices may be here to stay as demand from developing countries and production costs rise. Another report by the body for rich nations, the OECD, said prices will fall, but only gradually. It said the current price spike was higher than previous records, partly due to bad weather ruining crops. Devastating climate change and increasing pollution have caused the disaster in the sphere. As well as key factors such as weather, supply and demand and energy costs, speculators are also to blame for making commodity prices more volatile, the FAO says. But factors, such as rising fuel prices and biofuel demand, will keep future costs high. The FAO said speculators were also to blame for volatile commodity markets. But the hardest-hit by rising food costs will be the poorest people on the planet, where a large share of income is spent on food, the FAO warned. US government incentives for ethanol producers are distorting the market.
Earlier this month, the UN Food and Agriculture Organization (FAO) calculated a report that the amount of money being spent globally on importing food was set to top $1 trillion (£528bn) in 2008, a 26% rise on the previous year. One key assumption made is that crude oil prices will peak at $104 a barrel by 2017. But the price is already well above that, and some reputable analysts are now predicting oil will go to $200 a barrel and while there may be a drop in food prices in coming years, “there is a sting in the tail. “Prices will level off at a far higher average level than seen before the crisis erupted. The long era of cheap food is over.” The summit beginning in Rome on 3 June tried to find a way out, and since the crisis has many causes, the solution, too, is expected to be complex. The FAO believes the commodity boom has forced some in the developing world to spend more than half their income on food, particularly those countries that have to import much of their food. Prices will level off at a far higher average level than seen before the crisis erupted. “We are very worried particularly about biofuel policy.
UN has warned against higher food costs. The participants made the pledge to engage, actively and constructively, in the implementation of a comprehensive and coordinated strategy and action plan to address the current food security crisis and its underlying causes. he food price index of the UN’s Food and Agriculture Organization (FAO) rose by a steep but manageable 8% in 2006, but then much more sharply – by 24% – in 2007, and 53% in the first three months of this year alone – an unprecedented rise. On the eve of the summit, Ban said “we are literally paying the price” for overlooking investment in agriculture. “If not handled properly, this issue could trigger a cascade of other crises – affecting economic growth, social progress, and even political security around the world,” he warned. World prices for wheat, maize and oilseed crops doubled between 2005 and 2007, and while the FAO expects these prices to fall, the decline may be slower than after previous spikes.
With a view to improving the situation, a special High Level Task Force was created to continue the coordination of the UN-response to the food crisis. FAO officials said 850 million people already faced famine or malnutrition, and rising food and fuel prices would push that figure over the one billion mark, with the risk of further riots and instability in affected nations. Prices of staples such as rice, corn and wheat have soared. The UN World Food Program (WFP) said it was rolling out an additional US$1.2 billion in food assistance to help tens of millions of people in more than 60 nations hardest hit by the food crisis. Delegates to the UN summit began hammering out an emergency plan to reduce hunger and help Third World farmers despite often testy disagreement behind the scenes over the future of biofuels.
Participants recognized that the world food crisis provides an opportunity to boost agricultural production in the developing countries, in particular in Africa and noted that funding needs for emergency food assistance must be met fully and urgently to avert acute hunger and further unrest Participants recognized that the recent dramatic escalation of food prices worldwide has multiple and complex structural causes, many of which are interconnected. It represents a challenge of global proportions and has affected millions of people. The crisis threatens to undermine progress towards the Millennium Development Goal of eradicating hunger and towards other Millennium targets, and risks pushing over 100 million people back below the US$1 a day poverty line. They also recognized that the world food crisis threatens the stability of several countries.
Italian President Giorgio Napolitano stated, in his opening remarks: “We cannot rely on the balancing forces of the market to overcome the food crisis and provide a perspective of real food security!” There is much discussion of the importance of coordinated intervention to deal with the crisis.Rome Mayor Gianni Alemanno, a former agricultural minister, for example, made emphatic remarks concerning the inability of the market to create food security.
The main document they considered is a hard-headed look at the problems, challenging some preconceptions that have emerged in recent months. For example, the paper downplays the role of increased demand from Asia in worsening the whole crisis, pointing out that China is a net exporter of cereals, and India, the other fast-growing economy in the region, has been a net importer in only one year since 2000. But on the other hand, both are responsible for pushing up the price of proteins, particularly because of increased demand for meat from China, and demand for oilseeds (like soybeans) and vegetable oils from both countries. Oilseeds have been squeezed, particularly as farmers replaced the crop, planting wheat to fill the shortfall left by the collapse in wheat production. Oilseed production has dropped by a fifth in some big producing countries, including Canada and Australia. Over consumption and wastages of food grains also figured in the debates.
THREE: Biofuels controversy
World is looking forward to the meet coming out with tangible solutions to the global price issue. A major portion of food worldwide has been for biofuels at the cost of the hungry poor people. The problem of chronic underinvestment in agriculture can no longer be ignored. People have spent at least twice as much as in the previous year because prices have gone up at least by 100%.
Biofuels are clearly a major competitor for land needed for food production.
Protesters outside the summit demanded a fair conclusion to the Doha round of trade negotiations at the World Trade Organization, now going on for seven years. It was originally designed to be a “round for the developing world”, but has become bogged down amid competing interests. Italy seeks to ensure that agriculture, food security and fight against poverty will remain high in the G8 agenda in July also during the Italian Presidency in 2009.
The biggest political argument at the summit, thus, was around biofuels, now actively encouraged in a number of countries as a way of reducing dependence on oil and coal. Three-quarters of the increase in maize production worldwide in 2007 was for biofuels. The FAO summit document is clear about the impact of biofuels, saying it has been more important in pushing up food prices than the huge increase in the price of oil. Therefore, one area that generated disagreements in Rome is biofuel – most of the increase in maize production last year went into making fuels such as ethanol, not food.
The US plans to use 25 per cent of its corn crop for ethanol production by 2022, and the European Union aims to obtain 10% of its car fuel from bio-energy by 2020. The US Agriculture Secretary, Ed Schafer, insisted that “the use of sustainable biofuels can increase energy security, foster economic development especially in rural areas and reduce greenhouse gas emissions without weighing heavily on food prices.” Ban asked the US and other countries to phase out subsidies that encourage farmers to produce for fuel. UN officials said there would be a range of “confidence-building” options for governments. The taskforce Ban created to target the food crisis is expected to present a 38-page report with measures that could cost up to $15bn (£7.5bn) to implement. In the short term, the report will call for a reduction in tariffs and the provision of subsidies for poorer farmers.
Brazil is the world’s most enthusiastic producer of biofuels, despite increasing evidence that the technology may not be the clean solution that was initially believed. And the presence of President Lula of Brazil, among a number of other heads of state at the summit, meant that this issue would be hotly debated.
Jacques Diouf, director general of the FAO, said: “Nobody understands how $11-12 billion-a-year subsidies in 2006 and protective tariff polices have had the effect of diverting 100m tonnes of cereals from human consumption, mostly to satisfy a thirst for fuel for vehicles.” Schafer responded that biofuels had contributed under 3 per cent to food price increases. However FAO officials said biofuels accounted for 59 per cent of the increase in global use of coarse grains and wheat between 2005-2007, and 56 per cent of the increase in vegetable oils. The International Monetary Fund (IMF) estimates that biofuels are responsible for up to 30 per cent of the price rises overall. Douglas Alexander, Britain ‘s International Development Secretary, said that Western farm subsidies were also responsible for food price rises. “It is unacceptable that rich countries still subsidise farming by $1 billion a day, costing poor farmers in developing countries an estimated $100 billion a year in lost income,” he said.
Environmentalists believe biofuels are to blame for high prices Biofuels are clearly a major competitor for land needed for food production. In this multi-dimensional chess game of cause and effect that has run round different crops to cause the crisis, there are some opportunities. Despite its central importance in life, agriculture has been a forgotten sector in the world economy for several decades. Real prices, taking account of the effect of inflation, have declined. Many wanted to include a demand to increase biotechnology, despite the opposition of consumers in the developed world, particularly Europe, to GM crops.
Ban Ki Moon, the UN Secretary-General, said “Nothing is more degrading than hunger, especially when man-made”. He said the “global price tag” to overcome the food crisis would be $15 billion to $20 billion a year. Food supplies would have to rise 50 per cent by the year 2030 to meet demand. The presence of the former UN Secretary General Kofi Annan at the summit meant that more attention will be paid to his proposal for a “green revolution” in Africa, matching the increase in yields that transformed farming in Asia a generation ago.
The Rome conference, hosted by the UN Food and Agriculture Organization (FAO), has warned the industrialized countries that unless they increase yields, eliminate barriers and move food to where it is needed most, a global catastrophe could result. The FAO is calling on donor countries to dig deeper – to help farmers in developing countries get access to fertilizer, seeds and the animal feed they require. Of course, since predicting a future oil price is a near-impossible task, current crisis has to be controlled. Looking ahead, climate change may also affect crop harvests, pushing up prices further. Long-term measures will focus on increased investment.
With each country trying only to take care of its own national interests, the three-day summit, convened by the UN FAO which is based in Rome, ended on 05 June without any tangiblee results. The Summit developed into a veritable showdown between the forces of national sovereignty, on the one side, and the British imperial interests controlling globalization, on the other. Alongside recommending a major increase in food aid to get over the immediate crisis, the FAO summit did not make worthwhile proposals to invest in training, education, research and development, and transport infrastructure, particularly in Africa. The UN Chief stressed the need for a collective and concerted effort of all concerned. He noted that all agree on the most important issues: the common challenge, the need to focus on the poorest and the insufficiency of food production.
The world leaders were unable to come to an agreement on the final conference communiqué. Many attacked the hypocrisy of the debate. The participants made the pledge to engage, actively and constructively, in the implementation of a comprehensive and coordinated strategy and action plan to address the current food security crisis and its underlying causes. Summit targeted global food crisis/prices. But that decline has now been arrested for the first time, so for the first time investment is worthwhile.
Many countries do not succeed in producing enough. The continued destruction of food for creating fuels is sold to developing countries as a wonderful means to return to prosperity by joining the frenzy. Brazil in particular falls victim to this trap, as it has a developed sugar cane industry from colonial days. World powers must to work together for a policy of guaranteeing investment and food self-sufficiency, and abandon the market policy, which is subject to financial speculation and distortion, rather than having to clean up the mess created by the market policy afterwards. Seed and fertilizer are needed and investment must be increased. There are problems, represented by subsidies, tariffs, and property rights on seeds, which prevent supply and demand from meeting properly. EIR pointed to the need for an industrial revolution as the basis for a Green Revolution in Africa , given the drastically inadequate infrastructure development.
The main causes of the rising food prices include rising demand from fast-developing countries, higher oil costs and global warming. However, the food crisis could also shift the epicenter of global agriculture from developed to developing countries and the FAO predicts that emerging economies will dominate in the production and consumption of most basic foods in 10 years. The Rome summit was followed by the G8 summit in Japan recently and will again meet next month to consider the food issue, besides, of course, climate change and the final stages of the stalled WTO Doha round of talks on global trade. Pascal Lamy, as a Doha deal would, perhaps, reduce the trade-distorting subsidies that have stymied the developing world’s production capacity.
The summit offered great disappointments, given the hopes for real change with which many had come to Rome , and with which many in the whole world watched the proceedings in Rome . The declaration finally adopted by the conference consists mainly of commitments of a far too general nature, and there remains the commitment to biofuels, emphasized by the U.S. delegation in a final statement in the plenary session. the result of this summit will be seen as totally inadequate in the face of the continuing escalation of the worldwide crisis. The tragically missed opportunity was due to the willful sabotage of all constructive debate by the delegations from Great Britain, the U.S.A and other countries currently under the thumb of the British imperial institutions. Effective structural, systemic reforms have to be devised from this standpoint. World leaders should seek to ameliorate the situation for the 900 million desperately hungry persons on this planet.
A final communjnque issued vows to eliminate hunger and secure “food for all, today and tomorrow”. The leaders undertake to “stimulate food production and increase investment in agriculture” while addressing obstacles to food access and using the planet’s resources sustainably for present and future generations. The document calls for a reduction in trade barriers and food export restrictions, emergency food aid, increased crop yields and guidelines on the use of biofuels.
DR.ABDUL RUFF Colachal
Researcher in International Relations,
Analyst, Columnist & Commentator