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GLOBAL: Fund launched for poor countries struggling with high food prices
14 Jan 2008 17:32:00 GMT
 Source: IRIN

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OUAGADOUGOU, 14 January 2008 (IRIN) - The UN Food and Agriculture Organization (FAO) has launched a multi-million dollar fund for import-dependent poor countries to help adapt their farming industries quickly to cope with galloping global food prices.

Concern is mounting at the FAO that poor countries' food needs will not be met by outside production this year as prices for basic commodities such as wheat are rising and supply is limited, FAO director general Jacques Diouf said in the Burkina Faso capital Ouagadougou on 12 January.

The US$17 million fund will help fifty least developed countries - poor countries that are most heavily dependent on food imports - access fertilisers and seeds for corn, rice and sorghum to boost domestic food production and insulate them from price shocks when they fluctuate, Diouf told journalists.

"We have appealed to our multilateral and bilateral partners to mobilise their resources … and our hope is that this mechanism will be operational between March and July this year so that the next harvest benefits from it."

According to the FAO, the total cost of imported foodstuffs for Low Income Food Deficit Countries - countries that cannot produce enough food to meet people's needs and lack sufficient foreign exchange to fill the gap - was 25 percent higher in 2007 than 2006, rising to more than US$107 billion.

Price hikes are being caused by the lowest global food stocks ever recorded, combined with severe droughts and floods in 2007 in major crop exporters including Australia, high oil prices which are pushing up shipping costs, and increasing demand from humans and animals in Latin America and Asia.

Growing demand for crops like sugar cane, cassava and cereals such as corn, for use in the production of bio fuels, has also influenced the markets.

Diouf emphasised that the fund is meant as a short-term fix, and must be accompanied by medium and long term projects to ensure the sustainability of food production in poor countries

"The only way to face the situation is to increase national and local production", Diouf urged, calling for policies to support fertilisers in particular.

According to the FAO, only 4 percent of farms are irrigated in sub-Saharan Africa compared to 38 percent in Asia, with the rest relying on annual rains to provide a short growing season.

"We must move away from the agricultural lottery that consists of putting all our resources into fertiliser, equipment and seeds and then praying for rain," Diouf said.

He warned of "social consequences" and economic problems for poor countries and other food importers that ignore the impact of increasing prices.

"We are concerned that if price rises continue at this rate and we do not adopt measures to increase production in importing countries, above all in the least developed countries, we may come to a situation when people cannot purchase food even though they have money", Diouf said.

The FAO says unrest linked to high food price has already occurred in Morocco and Yemen in North Africa, Uzbekistan in Central Asia, and Guinea, Mauritania and Senegal in West Africa.

"We could be faced with more and more conflicts in certain countries," Diouf warned.

bo/nr/aj

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