/ 3 June 2008

Food summit blames trade barriers for high prices

The United Nations urged a summit on the global food crisis on Tuesday to help stop the spread of starvation threatening nearly one billion people by lowering trade barriers and removing export bans.

”Nothing is more degrading than hunger, especially when man-made,” UN Secretary General Ban Ki-moon told world leaders who are likely to disagree over the link between biofuel production and high food prices.

The head of the UN’s Food and Agriculture Organisation (FAO), which is hosting the summit, said wealthy nations had been spending billions of dollars on farm subsidies, wasteful and excess consumption of food, and on arms.

” … The excess consumption by the world’s obese costs $20-billion annually, to which must be added indirect costs of $100-billion resulting from premature death and related diseases,” said FAO director general Jacques Diouf, who is from Senegal.

The World Bank and aid agencies estimate soaring food prices could push as many as 100-million more people into hunger. About 850-million are already hungry.

Ban estimated the ”global price tag” to overcome the food crisis would be $15-billion to $20-billion a year and that food supply had to rise 50% by the year 2030 to meet climbing demand.

”Some countries have taken action by limiting exports or by imposing draft controls,” he said. This ”distorts markets and forces prices even higher. I call on nations to resist such measures and to immediately release exports designated for humanitarian purposes”.

Aid agencies say Japan and China have contributed to high rice prices, which have triggered riots as far away as Haiti, by controlling their stocks. Japanese Prime Minister Yasuo Fukuda promised at the summit to release at least 300 000 tonnes of imported rice from storage to ease the crisis.

The Rome summit will set the tone on food aid and subsidies for the Group of Eight summit in Japan in July and what is regarded as the concluding stages of the stalled talks under the World Trade Organisation aimed at reducing trade distortions.

Countries are working on proposals at the WTO to cut tariffs and subsidies in agriculture as part of a global trade deal.

Food to fuel

The cost of major food commodities has doubled over the last couple of years, with rice, corn and wheat at record highs. Some prices have hit their highest levels in 30 years in real terms, provoking protests and riots in some developing countries where people may spend more than half their income on food.

The OECD said in Paris on Tuesday that average world food prices will retreat from current peaks but will still be up to 50% higher in the coming decade than in the previous 10 years. OECD chief Angel Gurria said high oil prices, ”which are part and parcel of food prices”, would not ease sharply either.

High oil prices have increased interest in biofuels, which are blamed by many for competing with food output for grains and oilseed and driving up prices. The United States and Brazil, the world’s biggest producer of ethanol from sugar cane, are expected to defend biofuels from such accusations at the summit.

The United States is channelling about a quarter of its maize crop into ethanol production by 2022 and the European Union plans to get 10% of auto fuel from bio-energy by 2020. Biofuel producers wrote to the world leaders at the Rome summit arguing for diversifying energy sources via biofuels.

”A highly constrained supply of crude oil and petroleum products is wreaking havoc on all countries and markets across the globe, especially with respect to food,” they wrote.

United States Agriculture Secretary Ed Shafer said before the summit biofuels accounted for only around 3% of the total food price rise. Charity Oxfam said it was closer to 30%.

Brazilian President Luiz Inacio Lula da Silva said rich nations’ ”intolerable protectionism” was the main cause of global food inflation.

”Subsidies create dependency, breakdown entire production systems and provoke hunger and poverty where there could be prosperity. It is past time to do away with them,” he said.

A distraction from food at the summit was the presence of Zimbabwe’s Robert Mugabe and Iran’s Mahmoud Ahmadinejad, on his first trip to the European Union. Critics have accused both of contributing to food shortages at home. – Reuters 2008