Banking on food

Bangladesh, one of the world’s 49 least developed countries and described as the poorest of the poor, is calling for the creation of a global food bank.

“We have suggested that a food bank could allow countries facing a short-term shortfall in production to borrow food grains on preferential terms,” said Bangladeshi Prime Minister Fakhruddin Ahmed. Once they overcome the shortfall these countries could return the quantum to the food bank, he said.

At a summit of the South Asian Association for Regional Cooperation (Saarc) last August, the leaders of Afghanistan, Bangladesh, Bhutan, India, the Maldives, Nepal, Pakistan and Sri Lanka reiterated their own proposal for a regional food bank.

“We direct that the Saarc food bank be urgently operationalised,” said the declaration adopted at the conclusion of the meeting in the Sri Lankan capital of Colombo.

The summit also directed that an “extraordinary meeting” of Saarc agriculture ministers be convened in New Delhi in November to discuss the “emerging global situation of reduced food availability and the worldwide rise in food prices”.

The proposal for a food bank comes at a time when most food-deficit developing nations are worried that the spreading economic crisis will affect them — sooner or later — making the situation worse.

In an interview Hamid Rashid, director-general of Multilateral Economic Affairs in Dhaka, spelled out details of the proposal, which Bangladesh is pushing at the highest levels at the United Nations. “We envisage that the Global Food Bank will have two operational ‘windows’ to stabilise world food prices,” Rashid said.

The first window, based on special drawing rights (SDRs), will allow countries to borrow food grains in times of crisis and shortfalls, according to a pre-determined quota.

The quota for each country, Rashid said, will be determined on the basis of a formula, which will take into account the size of its vulnerable population, variability in its food production, its dependence on food imports and other related factors.

Borrowing countries will repay in the form of food grains. The food stock will remain dispersed all over the world, perhaps closer to high-risk locations, and will cross borders only when SDR would be exercised.

The second window of the Global Food Bank — the market window — will create a trading platform for futures and options on food grains.

“Governments will be able to buy and sell futures and options to and from private parties, to smooth and stabilise the prices of food grains over medium to long run,” Rashid said.

He said that whether his prime minister’s proposal will materialise or not will depend on a number of factors, including strong political leadership, the willingness of large food exporters to participate in such a mechanism and the lessons learned from the current crisis.

Matthew Wyatt, of the Rome-based International Fund for Agricultural Development (Ifad), said several ideas have been floated involving physical or virtual grain reserves, creation of regional or global funds for agricultural development and food, establishment of private investment funds for agricultural and enterprise development, or a combination of all of these.

“Ifad welcomes the suggestion of the Bangladeshi prime minister as an important contribution to this debate,” Wyatt said.

But, he added, there is also a need to consider other instruments to address access to food by poor rural people, including safety nets, cash transfers, investments in increased smallholder agricultural productivity and creation of sustainable, non-agricultural economic activities to increase the capacity of the poor to demand food through the market.

During the two-week, high-level segment of the General Assembly, which concluded last Friday, speaker after speaker underlined the need for both short and long-term solutions to the food crisis that refuses to subside.

Malawi pleaded for subsidies for agriculture and food production in sub-Saharan Africa.

Sierra Leone said that “massive investment in agriculture is the key to a long-term solution to the continent’s food crisis”. The country’s president, Ernest Bai Koroma, told delegates last week that he welcomed the work of the Alliance for a Green Revolution in Africa, chaired by former UN Secretary General Kofi Annan.

“Despite many successes and innovations in technology, institutions and practices in recent decades, the Green Revolution breakthrough that jump-started Asia’s agricultural growth in the 1960s and 1970s has not been mirrored in the African continent,” said Wyatt.

A uniquely African and “doubly green” agricultural revolution is needed to respond to challenges that are profoundly different from those confronted by Asia 40 years ago and to Africa’s diversity of agro-ecological contexts and livelihoods, he said.

First, the nature of agriculture in Africa is different — it is more diversified and resources and climatic conditions are more varied.

African agriculture, he said, is dominated by small-scale farmers and their skills, energy, innovations and experience must be harnessed.

In many areas progress is undermined by poor infrastructure, policy discrimination against agriculture, low investment, armed conflicts and chronic health problems such as TB, malaria and HIV/Aids.

Increasingly, higher food, energy and input prices are having significant effects on household food security and purchasing power. Wyatt said increasing local, national and regional production and trade are critical priorities in the face of market volatility.

“The challenges of creating an African Green Revolution have mounted as a result of soaring food and fuel prices and the effects of climate change. To make it a reality, agriculture must be a priority for donors and African governments alike at the level of policy and practice.” An African Green Revolution will also need access to inputs, including fertiliser, and strong private sector involvement.

Rapidly increasing food prices are a key challenge given that food accounts for 60% to 80% of a poor person’s daily expenses. Higher food prices are expected to push about 30 million people into deeper poverty in sub-Saharan Africa. — IPS

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