Monday, July 16, 2007

[PB] UN warns it cannot afford to feed the world


UN warns it cannot afford to feed the world

By Javier Blas and Jenny Wiggins in London

Published: July 15 2007 22:01 | Last updated: July 15 2007 22:01

Rising prices for food have led the United Nations programme fighting
famine in Africa and other regions to warn that it can no longer afford
to feed the 90m people it has helped for each of the past five years on
its budget.

The World Food Programme feeds people in countries including Chad,
Uganda and Ethiopia, but reaches a fraction of the 850m people it
estimates suffers from hunger. It spent about $600m buying food in 2006.
So far, the WFP has not cut its reach because of high commodities
prices, but now says it could be forced to do so unless donor countries
provide extra funds.

Josette Sheeran, WFP executive director, said in an interview with the
Financial Times: "In a world where our contributions are holding fairly
steady, this [cost increase] means we are able to reach far less people."

She said policymakers were becoming more concerned about the impact of
biofuel demand on food prices and how the world would continue to feed
its expanding population.

The warning could re-ignite the debate on food versus fuel amid concerns
biofuel production will sustain food inflation and hit the world's
poorest people.

The WFP said its purchasing costs had risen "almost 50 per cent in the
last five years". The UN organisation said the price it pays for maize
had risen up to 120 per cent in the past sixth months in some countries.

Biofuel demand is soaking up grain production as is rising consumption
in emerging countries for animal feed.

"We face the tightest agriculture markets in decades and, in same cases,
on record," Ms Sheeran said. Global wheat stocks have fallen to the
lowest level in 25 years, according to the US Department of Agriculture.

Ms Sheeran added: "We are no longer in a surplus world."

Surge in biofuels pushes up food prices

By Javier Blas and Jenny Wiggins in London

Published: July 15 2007 22:01 | Last updated: July 15 2007 22:01

A surge in the production of biofuels derived from corn, wheat and
soyabeans is helping to push up food prices so sharply that the World
Food Programme, the United Nation's agency in charge of fighting famine,
is finding it difficult to feed as many hungry people as it has in the past.

Josette Sheeran, WFP's executive director, said in an interview with the
Financial Times that rising food prices were "already having an impact
on WFP operations" and added: "There is a realisation we are facing a
new level of challenge."

Food commodity prices are surging because of a number of factors
including rising demand from China and bad weather, but the potential
consequences of the rising demand for biofuels has caught the attention
of those in the business of feeding the world.

Mark Spelman, head of Accenture's global energy practice, said the
biofuel industry was at risk of creating a public backlash similar to
wind power generation as food inflation continues.

"Windpower was a very popular renewable source of energy until a
wind-farm was planned in someone's backyard," he said.

Still, Paul O'Brien, overseas director for the humanitarian organisation
Concern Worldwide, said higher food prices could benefit farmers in
emerging markets if food aid programmes find it cheaper to spend cash
donations in the countries they distribute food in, rather than in the
US and Europe.

"What we would encourage is [food aid agencies] to look more locally ...
and for donors to give money to the WFP," Mr O'Brien said.

Some 77 per cent of the WFP's food purchases are made in developing
countries. Last year it spent $460m (€334m, £226m) in such countries,
making the largest cash purchases in Uganda, Ethiopia and Pakistan. The
United Nations organisation feeds some 90m people annually.

Ms Sheeran also said that her organisation and others were trying to
make it easier for poorer farmers to benefit from rising demand for
food, either by helping African farmers become more efficient and
tapping new markets or by helping small farmers in Latin America benefit
from the rising demand for biofuels.

"In a world of growing population, the African farmer will be needed,"
she said.

The rise in food prices has also underlined the difficulties the WFP and
other food aid programmes face when determining which type of donations
they receive are more effective – cash or commodities.

About half of the donations the WFP receives are now made in cash, the
rest in commodities. When the organisation started, it benefited mainly
from surplus food donated by wealthy nations including the US. It now
receives cash from many countries, and often, as is the case with the
US, must spend that money on products grown in the donor country.

Marc Cohen, research fellow at the US's International Food Policy
Research Institute, said that the rise in food prices had reawakened
questions over the best way to distribute food aid.

One idea that had been discussed in the past, Mr Cohen said, was for
donors to contribute to a global reserve or co-ordinated national
reserves of food so that food could be stockpiled.

"Now that prices are high, the idea may get on the table again," he said.
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