Friday, November 16, 2007

Climate, demographics to keep food costs high: World Food Programme

Reuters: Climate change, population growth and increasing demand for biofuels mean high food prices will keep rising in coming years, leaving the world's poorest even more vulnerable, the head of the U.N. World Food Programme said. Prices for agricultural commodities have spiked sharply in both developed and emerging markets in recent months, leaving many in the world's poorest regions like West Africa struggling to afford basic supplies such as rice and grains.

"With food prices at their highest level in decades, many people are simply being priced out of the food market," WFP Executive Director Josette Sheeran said late on Thursday during a visit to Senegal and Mali. From Senegal on Africa's westernmost tip to Ethiopia in the east, discontent over record prices for basic foodstuffs has become the focus of heated national debate, even in the more stable economies on the world's poorest continent.

Violent protests against food price increases shook the normally conservative Islamic republic of Mauritania last week, with stone-throwing demonstrators trying to storm at least one government food store and setting car tires ablaze. Unprecedented oil prices have increased transport costs while the explosion in biofuels, subsidized by some Western countries for being less environmentally damaging than fossil fuels, has also tightened supply and contributed to the rise.

China had swung from being one of the world's top corn exporters to exporting none last year as it held back stocks for biofuels, Sheeran said, while farmers in Africa were getting higher prices for food crops like cassava by selling them for use as an alternative energy source rather than food.

"Small farmers and poor farmers have contributed to the biofuels revolution which provides a new income stream ... but in the immediate, near future it is a challenge because we see tightening stocks," she said.

Climate change alone is expected to increase the number of under-nourished people in the world to 170 million from 40 million now, according to forecasts by the inter-governmental panel of experts on the issue. Changing rainfall patterns could mean that in just over a decade, rain-dependent areas of Africa could be producing half the agricultural yield they are now.

At the same time, the region's population is growing more quickly than almost anywhere else in the world: in Niger for example, on the southern edge of the Sahara desert, each woman has on average 7.1 children. Economists expect the higher food prices to be more than just a spike, instead referring to a structural adjustment that follows a sustained period of relatively low prices.

U.S. bank Goldman Sachs said last month that structural factors behind rising prices in Brazil, Russia, India and China would sustain higher costs for grains, meat, eggs and dairy products. Central banks in China, Brazil and India have voiced concern about the lasting impact of high food prices, which also make it more difficult for WFP to find funding for the emergency food aid it needs to provide for the world's most vulnerable people. "WFP's food costs have gone up 50 percent in the last five years alone," Sheeran said. "We're expecting over the next two years for that to go up another 35 percent but in some markets over the past six months we have had increases of over 40 percent."

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