Friday, April 11, 2008

The Official UN Explanation About Food Prices, Demand and Supply

InterPress News Service provided coverage of the news conference in New Delhi on Wednesday in which Jacques Diouf, director general of the United Nations Food and Agriculture Organisation (FAO), described spiralling food prices as an "emergency" that demanded concerted global attention.  "In the face of food riots around the world like in Africa and Haiti, we really have an emergency." Lennart Bage, president of the International Fund for Agricultural Development (IFAD) and Kandeh K. Yumkella, director general of the U.N. Industrial Development Organisation (UNIDO), also addressed the food problem.  The three U.N. agency heads, who were in the Indian capital for a global conference on the development of agro-industries as a means to fight poverty and create jobs.  They advocate increased agricultural investment in water and infrastructure to help small farmers increase productivity. 

Diouf, who blamed the crisis primarily on the steady migration of rural populations to the cities, in turn affecting food production, said he was looking to a summit in Rome in the first week of June to address this as well as factors that had to do with the developed world, such as the diversion of farmland to produce biofuels and speculation in the futures markets.  Yet other factors that contributed to the spike in prices, Diouf said, were adverse weather conditions, such as an unexpectedly severe cold spell in China, droughts in Australia and Kazakhstan and floods in India and Bangladesh.  According to Diouf, the world was now down to 405 million tonnes of cereal stocks, or 8-12 weeks worth of supplies for the world's populations. "The rise in prices of food commodities all over the world is not going to ease in the short term in view of supply-demand situation," he said.  "We have seen riots in Egypt, Cameroon, Haiti and Burkina Faso," Diouf said. "There is a risk that this unrest will spread in countries where 50 to 60 percent of income goes to food." Indonesia, Ivory Coast, Mauritania, Mozambique and Senegal have also seen unrest over the last few weeks that was attributed to food and fuel prices.  Global food prices have been rising steadily since 2002 and since January have risen 65 percent. In 2007 alone, according to the FAO's world food index, grain prices have soared 42 percent.  Diouf refused to comment directly on India restricting rice exports, which was said to have caused rice prices in Thailand, the world's biggest exporter of the Asian staple, to shoot up. But he said it was natural for countries to protect their national interests.  According to Diouf, rising income levels of people in rapidly developing economies like China and India was driving a "demand for more milk and more meat" that translated into higher demand for cereals. "I welcome economic growth in India and China, but I also hope they will invest in agriculture because these two countries account for 2.2 billion people out of six billion," Diouf said.

According to InterPress, UNIDO's Yumkella focussed on the shortage in food processing technology, suggesting that technology must be transfered to developing countries so that they can increase shelf life of basic foods."   According to Yumkella, "agro-industry," i.e. food processing, helps preserve foodstuff, add value and reduce post-harvest losses while enabling products to be transported across long distances, including to the rapidly expanding cities: "Agro-industry generates demand for agricultural products and holds vast potential for off-farm rural employment."  Urbanization, rising incomes and more women joining the labour market in many countries increase demand for processed food: worldwide, processed food and beverages now account for 80 percent of all food and drink sales.  One visible response to this trend was the rapid expansion of supermarkets in many developing countries, especially in South-east Asia and in Latin America. Yet, said Yumkella, there were impediments standing in the way of small farmers trying to benefit from this trend such as customs tariffs, non-tariff barriers, standards and certification requirements.   Yumkella also highlighted the global warming issue which will impose "great stresses on the world's ability to feed ever-growing populations. This challenge brings new threats to arable land areas, livestock rearing and fisheries through droughts, water shortages and pollution of land, sea and air."

I find it ironic that as the world faces a crisis in basic food availability, the UN persists in encouraging food processing -- which undoubtedly wastes more food than it saves, provides multi-national agro-industry with huge profits, and continues to drive rural subsistence farmers off the land and into the cities.

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