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The United Nations (UN) summit on global food crisis held in Rome
could not come up with a communique as unfortunately none could be
agreed upon. The summit ended up in trading of accusations between
the crops for fuel supporters and crops for human food protagonists.
Nonetheless, the leaders attending the summit did call for reducing
trade barriers and ending commodity export bans.
The World Food Programme has estimated that it will require $500
million on top of what has already been pledged to fill the food
gap. One would hope that the donor countries would step in and not
only ensure that their pledges are translated into actual money but
also that the needs of the global poor are met.
Ban Ki Moon, the UN Secretary General, put the nature of the crisis
very cogently: "Nothing is more degrading than hunger, especially
when man-made." He also added that to meet the world food demand,
production would have to rise by 50 percent by 2020. What has amazed
world governments is the fact that adverse weather conditions which
have negatively impacted on the productivity of various grains,
staples for a large number of global consumers, is only partly to
blame for the crisis. The other factors that have had a major impact
are all man-made as stated by Moon.
First and foremost is the increase in bio-fuel production and the
United States was blamed for this during the summit meeting. In its
own defence, the US claimed that its subsidies for the production of
corn ethanol were not playing a significant role in the sharp
increases in the price of food.
This triggered an angry rejoinder - a rejoinder that was supported
by the figures released by the UN. Jacques Diouf, director general
of the Food and Agriculture Organisation, stated that "nobody
understands how 11 to 12 billion dollars a year subsidies in 2006 (a
reference to the annual cost of US subsidies to produce ethanol from
corn) and protective tariff policies have had the effect of
diverting 100 million tonnes of cereals from human consumption,
mostly to satisfy a thirst for fuel for vehicles."
The second major reason for the global food crisis is attributed to
the rising cost of oil. Brazil's president, Luiz Inácio Lula da
Silva, stated that "it offends me to see fingers pointed at biofuels,
when the fingers are coated in oil and coal." Iranian President
Ahmedinejad laid the blame for the rise in oil prices on the
'capitalists'.
However, figures from US government agencies and trading data
indicate that hedge fund managers and speculators have reduced bets
on higher oil prices by 80 percent since July last year when prices
began to rise sharply and crude futures rose to record highs. So if
it's not the hedge fund managers and the speculators then who is
responsible for the oil price hike?
So far there is no consensus on the reason behind the oil price rise
though some analysts are laying the blame on the heat wave currently
in 18 US states - which they claim also reflects the potency of the
hurricane season and with the refineries mostly situated on the US
Gulf coast a bad hurricane year also affects the supply. But this
fact should have impacted on the hedge fund managers and speculators
calculations. Thus the reasons behind the oil price rise remain
unclear.
The third reason for the global food crisis is in the decision of
several countries to ban exports in an effort to continue to meet
domestic demand. Some countries that have taken a decision to ban
exports are Egypt (rice), Indonesia (medium grade rice), Vietnam
(rice), Kazakhstan (wheat) and Malawi (maize with the exception of
exports to Zimbabwe). The decision to ban exports was taken by these
countries to avoid domestic shortages - a decision, that many in the
developing world find justifiable.
The Food and Agriculture Organisation has identified 36 crisis
countries, 21 of which are in Africa. It is heartening to know that
Pakistan is not one of the fifteen countries. Be that as it may it
is imperative that the government understands the extent of the
global food crisis and focuses on domestic farm productivity in the
forthcoming budget as a priority sector.
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