Rapid rise in food prices could end in war – World Bank

The sharp rises have led to protests and unrest in many countries, including Egypt, Ivory Coast, Ethiopia, the Philippines and Indonesia.

World Bank echoes food cost alarm

The rapid rise in food prices could push 100 million people in poor countries deeper into poverty, World Bank head, Robert Zoellick, has said.

His warning follows that from the leader of the International Monetary Fund, who said hundreds of thousands of people were at risk of starvation.

Mr Zoellick proposed an action plan to boost long-run agricultural production.

There have been food riots recently in a number of countries, including Haiti, the Philippines and Egypt.

“Based on a rough analysis, we estimate that a doubling of food prices over the last three years could potentially push 100 million people in low-income countries deeper into poverty,” Mr Zoellick said.

His proposal for a “new deal” to tackle the international food crisis was endorsed by the World Bank’s steering committee of finance and development ministers at a meeting in Washington.

The World Bank and its sister organisation, the IMF have held a weekend of meetings that addressed rising food and energy prices as well as the credit crisis upsetting global financial markets.

Spiralling inflation

Food prices have risen sharply in recent months, driven by increased demand, poor weather in some countries that has ruined crops and an increase in the use of land to grow crops for transport fuels.

GLOBAL FOOD PRICE RISES
Wheat: 130%
Soya: 87%
Rice: 74%
Corn: 31%
Time: Year to March 2008
Source: Bloomberg

The price of staple crops such as wheat, rice and corn have all risen, leading to an increase in overall food prices of 83% in the last three years, the World Bank has said.

The sharp rises have led to protests and unrest in many countries, including Egypt, Ivory Coast, Ethiopia, the Philippines and Indonesia.

In Haiti, protests last week turned violent, leading to the deaths of five people and the fall of the government.

Restrictions on rice exports have been put in place in major producing countries such as India, China, Vietnam and Egypt.

Importers such as Bangladesh, the Philippines and Afghanistan have been hit hard.

“We have to put out money where our mouth is now so that we can put food into hungry mouths,” Mr Zoellick said. “It’s as stark as that.”

He called for more aid to provide food to needy people in poor countries and help for small farmers. He said the World Bank was working to provide money for seeds for planting in the new season.

He also urged wealthy donor countries to quickly fill the World Food Programme’s estimated $500m (£250m) funding shortfall.

Mr Zoellick’s “New Deal for Global Food Policy” also seeks to boost agricultural policy in poor countries in the longer-term.

On Saturday, the head of the IMF, Dominique Strauss-Kahn, warned of mass starvation and other dire consequences if food prices continue to rise sharply.

“As we know, learning from the past, those kind of questions sometimes end in war,” he said.

He said the problem could lead to trade imbalances that may eventually affect developed nations, “so it is not only a humanitarian question”.

Story from BBC NEWS: http://news.bbc.co.uk/go/pr/fr/-/2/hi/business/7344892.stm

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