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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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Many thanks to those of you who have recently sent in a voluntary subscription payment to support AfricaFocus Bulletin. If you have been intending to do so, now is a good time. Help AfricaFocus reach more people with reliable information on Africa. Send in a check or pay on-line with Google Checkout or Paypal. See http://www.africafocus.org/support.php for details.

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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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