“We are able to reach less people”–U.N. Food Program
This pair of articles by Javier Blas and Jenny Wiggins of the Financial Times is of direct relevance to the debate in Washington, D.C. over federal biofuel subsidies and mandates.The director of the U.N.’s World Food Program says rising food prices are already having an impact on the organization’s ability to feed the hungry. With donations holding fairly constant, higher prices mean “we are able to reach far less people.”
Several factors are at work, but the one of greatest concern is the increased demand for grain, especially corn (maize), due to government biofuel programs:
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.
Surge in biofuels pushes up food prices
By Javier Blas and Jenny Wiggins in London
Financial Times
Published: July 15 2007 22:01 | Last updated: July 15 2007 22:01A 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.
Copyright The Financial Times Limited 2007
UN warns it cannot afford to feed the world
By Javier Blas and Jenny Wiggins in LondonPublished: 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.”
Copyright The Financial Times Limited 2007