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Financial Turmoil Could Aggravate Global Food Crisis

ROME, Italy, October 15, 2008 (ENS) – Dr. Jacques Diouf worries that the global financial crisis will cause wealthy governments to reduce food and agriculture aid to developing countries and introduce protectionist measures to keep out their agricultural products.

“The global financial crisis should not make us forget the food crisis,” Diouf said Tuesday. “Borrowing, bank lending, official development aid, foreign direct investment and workers’ remittances – all may be compromised by a deepening financial crisis.”


FAO Director-General Jacques Diouf
(Photo by Guilio Napolitano courtesy FAO)

If aid is reduced, there could be another food crisis next year, despite the record 2008 cereal harvest which is now expected, Diouf warned at the opening of this week’s meeting of the UN Food and Agriculture Organization’s Committee on World Food Security.

The meeting marks World Food Day, held every year on October 16, the day the Food and Agriculture Organization was founded in 1945 as the first UN agency created to address global hunger.

“The great uncertainty now enveloping international markets and the threat of global recession may tempt countries towards protectionism and towards reassessing their commitments to international development aid,” Diouf warned.

Diouf, who heads the FAO, said the organization’s latest report on crop prospects and the global food situation shows grain harvests are projected to increase 4.9 percent to a record 2,232 million metric tonnes.

But still, 36 countries are still in need of external assistance as a result of crop failures, conflict or insecurity, or continuing local high prices

Diouf noted that the financial crisis, following the crisis over soaring food prices that threw an additional 75 million people into hunger and poverty in 2007, may deepen the plight of the poor in developing countries.

“Last year it was the pan,” Diouf said. “Next year could be the fire.”

Commodity prices are currently dropping on the expectation of good grain harvests but also because of a slowing world economy.

But this could mean a cutback in plantings followed by reduced harvests in major exporting countries, Diouf warns. Given continuing low grains stocks, record food prices could return next year – a catastrophe for millions who by then would be left with little money and no credit.


Children at the Mungano feeding centre
in Goma, Democratic Republic of Congo
run by Caritas and supported by the
World Food Programme. (Photo by
Marcus Prior courtesy WFP)

“It would be unfortunate if this were to be the case and the recently mobilized political will towards enhanced international support for developing country agriculture were to evaporate,” he said.

In June, governments and world leaders agreed at an FAO High-Level Conference on World Food Security that “the international community needs to take urgent and coordinated action to combat the negative impacts of soaring food prices on the world’s most vulnerable countries and populations.”

The Group of Eight Summit in Japan a month later confirmed the resolve of world leaders to address global food security as a top priority and demonstrated a growing political will to reverse the trend toward global hunger.

“It is vital that this momentum be maintained,” Diouf said. “Unless political will and donor pledges are turned into real and immediate action, millions more may fall into deeper poverty and chronic hunger.”

The number of malnourished people around the world is set to increase by 44 million to almost one billion by the end of 2008 due to the combined impact of the food and fuel price crises, according to a World Bank report presented last weekend at the annual meeting of the World Bank and its sister institution the International Monetary Fund.

Poor families around the world are being pushed to the brink of survival, causing irreparable damage to the health of millions of children, said the report, entitled, “Rising Food and Fuel Prices: addressing the risks to future generations.”


World Food Programme food distribution
for Horebo Camp, eastern Democratic
Republic of Congo. (Photo by Marcus
Prior courtesy WFP)

“While people in the developed world are focused on the financial crisis, many forget that a human crisis is rapidly unfolding in developing countries,” said World Bank Group President Robert Zoellick, a former U.S. trade representative.

“The financial crisis will only make it more difficult for developing countries to protect their most vulnerable people from the impact of rising good and fuel costs,” said Zoellick.

That is exactly what is happening in Zimbabwe. With more than five million Zimbabweans facing severe food shortages, the UN’s World Food Programme is appealing for US$140 million to provide vital relief rations over the next six months.

If the appeal falls short, WFP warns it will run out of food in January at the peak of the crisis.

“Millions of Zimbabweans have already run out of food or are surviving on just one meal a day and the crisis is going to get much worse in the coming months,” said Mustapha Darboe, WFP regional director for East, Central and Southern Africa.

“WFP can prevent this crisis from becoming a disaster but we need more donations and we need them now.”

Zimbabweans from middle social income categories, such as teachers, who normally have not sought food assistance, are now gathering at food distribution points at several locations in the country to register for the WFP’s vulnerable group feeding program.

The United States was the largest donor to WFP’s operations in Zimbabwe in 2008, giving US$105 million, followed by the UK, which donated $18 million, and Australia with $14 million.

Released today, the World Food Programme’s latest report on the highest profile food emergencies shows they are centered in Africa.


Somali women and children wait for their
donated porridge to cook at the
District Medical Office in Baidoa. (Photo
by Peter Smerdon courtesy WFP)

In Ethiopia, rations of beans and oil have been reduced and 6.4 million people are projected to need food aid in November.

In Somalia, a ban on International Medical Corps operations in the Bakool region of south Somalia by the Islamist insurgency group Al Shabaab has curtailed the distribution of food in the region. Reports indicate that CARE International has also been banned. WFP is talking with authorities in an attempt to find a resolution.

In Sudan, the WFP will take over a food support program to 130,000 internally displaced people in Gereida, South Darfur, by the end of the year, at the request of the International Committee of the Red Cross, which has been operating the program.

On Monday, a relief team left for Yambio, Western Equatoria State to set up a refugee feeding program in support of displaced Congolese people. The UN High Commission for Refugees reports that some 5,000 Congolese have fled to Yambio, and estimates that 150 people are still crossing daily into southern Sudan.

Fleeing refugees reported violent attacks on their villages in the Democratic Republic of Congo, perpetrated by Uganda’s Lord’s Resistance Army.

In May, the World Bank Group created a new $1.2 billion rapid financing facility – the Global Food Response Program – to speed assistance to the neediest countries.

As of October 9, the program had approved and begun disbursing $193 million in 20 countries, including Somalia and southern Sudan.

One project totaling $7 million is pending approval, according to a statement by the bank, while an additional $651 million is being earmarked for programs in 11 countries.

The money is used to feed poor children and other vulnerable groups, provide for nutritional supplements to pregnant women, lactating mothers, infants and small children, to meet additional expenses of food imports or to buy seeds for the new season.

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