The New Nation - Internet Edition

BUSINESS REPORT

The world's poorest people will be hardest hit by the global rise in food prices. Poor people in developing countries typically spend more than half of their overall budget on food. For the 160 million people worldwide who survive on less than fifty cents a days, food price inflation can spell disaster, said Joachim von Braun, Director General, International Food Policy Research Institute (IFPRI), Saturday.

In a statement, he said this global food crisis is a complex problem that cannot be solved with simplistic approaches. More effective and coherent action is needed now to help the most vulnerable populations cope with the drastic hikes in their food bills and to assist developing countries with strategies to increase agricultural productivity.

"We call for a short term 'emergency package' to stem the tide of the humanitarian crisis. We also call for a 'resilience package' to strengthen the capacity of poor people and developing countries to meet their own needs in the long run.

The IFPRI Director General also made following recommendations to deal with the rising food prices.

Emergency Package

Enhance food assistance. Donor governments need to provide increased support for poor people's food and nutrition security. The focus should be on the most vulnerable, including children. Improve biofuels policies. Governments should revoke biofuel subsidies and excessive blending quotas (such as the requirement to use a certain percentage of ethanol in gasoline). Political leaders should consider a range of additional measures, including freezing biofuel production at current levels, reducing production, or enacting a moratorium on the use of grains and oil seeds for biofuels. At the same time, there needs to be support for development of bio-energy technologies that do not rely on food crops. A moratorium on grain-based biofuels would quickly unlock these commodities for use as food. This measure might bring corn prices down globally by about 20 percent and, as a consequence, decrease wheat prices by about 10 percent.

Stop export bans. A country that enacts measures such as agricultural export bans, high export tariffs, and price controls may reduce its risks of food shortages in the short-term. However, these measures are likely to backfire by making the international market smaller and more volatile. Export restrictions have harmful effects on import-dependent trading partners. For example, export restrictions on rice in India affect Bangladeshi consumers adversely and also dampen the incentives for rice farmers in India to invest in agriculture. Price controls reduce farmers' incentives to produce more food. Empower small-scale farmers. Providing improved seeds, fertilizer, credit, and other resources for small-scale farmers in developing countries would quickly improve production, increase incomes, and lower prices.

Resilience package

Invest in people. For longer term impact, developing countries need to invest in social protection measures, such as cash transfer programs, pension systems and employment programs. Preventative health and nutrition programs targeted to vulnerable groups (e.g. mothers, young children, and people living with HIV/AIDS) should be scaled up to ensure universal coverage. In addition, school feeding programs can play an important role in increasing school enrollment and in retaining children in school and enhancing their academic achievement.

Reduce market volatility. Improving grain stocks and enacting regulatory measures to curb excessive speculation in agricultural commodities would help to stabilize markets in times of crisis.

Support agriculture. Long term relief from rising food prices can only be possible with increased agricultural production. Industrialized nations should revitalize their support for research, innovation, and extension to transform small farm agriculture.

Implementation of both the short-term emergency response and the long-term solutions must begin now. Together, action in these areas would go a long way to stem the tide of rising food prices and reduce the threat of hunger and poverty.