High food prices may force aid rationing

“The United Nation’s agency responsible for relieving hunger is drawing up plans to ration food aid in response to the spiralling cost of agricultural commodities”….

“The WFP crisis talks come as the body sees the emergence of a “new area of hunger” in developing countries where even middle-class, urban people are being “priced out of the food market” because of rising food prices.”…

“The price of rice and wheat has doubled in the past year while freight costs have also increased sharply on the back of rising fuel prices.”…

The United Nation’s agency responsible for relieving hunger is drawing up plans to ration food aid in response to the spiralling cost of agricultural commodities.

The World Food Programme is holding crisis talks to decide what aid to halt if new donations do not arrive in the short term.

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Josette Sheeran, WFP executive director, told the Financial Times that the agency would look at “cutting the food rations or even the number or people reached” if donors did not provide more money.

“Our ability to reach people is going down just as the needs go up,” she said.

WFP officials hope the cuts can be avoided, but warned that the agency’s budget requirements were rising by several million dollars a week because of climbing food prices.

The WFP crisis talks come as the body sees the emergence of a “new area of hunger” in developing countries where even middle-class, urban people are being “priced out of the food market” because of rising food prices.

The warning suggests that the price jump in agricultural commodities – such as wheat, corn, rice and soyabeans – is having a wider impact than thought, hitting countries that have previously largely escaped hunger.

“We are seeing a new face of hunger in which people are being priced out of the food market,” said Ms Sheeran.

Hunger is now “affecting a wide range of countries”, she said, pointing to Indonesia, Yemen and Mexico. “Situations that were previously not urgent – they are now.”

The main focus of the WFP to date has been to provide aid in areas where food was unavailable. But the programme now faces having to help countries where the price of food, rather than shortages, is the problem.

Ms Sheeran said that in response to rising food costs, families in developing countries were moving in some cases from three meals a day to just one, or dropping a diverse diet to rely on one staple food.

In response to increasing food prices, Egypt has widened its food rationing system for the first time in two decades while Pakistan has reintroduced a ration card system that was abandoned in the mid-1980s.

Countries such as China and Russia are imposing price controls while others, such as Argentina and Vietnam, are enforcing foreign sales taxes or export bans. Importing countries are lowering their tariffs.

Food prices are rising on a mix of strong demand from developing countries; a rising global population; more frequent floods and droughts caused by climate change; and the biofuel industry’s appetite for grains, analysts say. Soyabean prices on Friday hit an all-time high of $14.22 a bushel while corn prices jumped to a fresh 12-year high of $5.25 a bushel.

The price of rice and wheat has doubled in the past year while freight costs have also increased sharply on the back of rising fuel prices.

The world’s poor countries will have to pay 35 per cent more for their cereals imports, taking the total cost to a record $33.1bn (in the year to July 2008, even as their food purchases fall 2 per cent, according to the UN’s Food and Agriculture Organisation.

The US Department of Agriculture warned this week that high agricultural commodities prices would continue for at least the next two to three years.

By Javier Blas in Washington and Gillian Tett in London
Published: February 24 2008 22:02 | Last updated: February 24 2008 22:02

Source: Financial Times

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