Saturday, May 17, 2008

Solving the food crisis

MUHAMMAD YUNUS

A comprehensive global plan is needed to tackle the high cost of food that threatens the lives of the world's poorest and most vulnerable people

THE GLOBAL food crisis is a dire reality for millions of the world's poor and a major test for the international community. Sustained, generous, wise leadership and broad-based cooperation is required to overcome the crisis and save lives.

Rising food prices have created tremendous pressure in the lives of poor people, for whom basic food can consume as much as two-thirds of their income.

There are many causes of these increasing pressures - oil that costs $120 a barrel; droughts in important producing regions; the increased use of corn for ethanol and soy oil for biodiesel; speculation in commodities markets; and ironically, increased prosperity in large countries such as China, India, Indonesia, and Bangladesh, which make up nearly half the world's population. Continually rising food prices are making it more difficult to feed the poorest of the poor worldwide and will reduce the prospect of achieving many of the Millennium Development Goals, unless immediate action is taken.

UN Secretary-General Ban Ki-Moon deserves credit for convening the leaders of 27 UN agencies and programs to organize a coordinated response. They have agreed to establish a high-level task force under Ban's leadership, with sound immediate objectives.

A comprehensive global plan should include the following six elements:

First, the international community must rapidly mobilize at least $755m, identified by the World Food Programme and UN leaders as necessary for emergency food relief. The Secretary-General might want to mobilize two or three global leaders as special envoys to help the UN find these funds.

Second, we must ensure that farmers are equipped to produce the next harvest. Farmers in many areas cannot afford seeds to plant or natural gas-based fertilizer, whose price has risen along with the price of oil. The International Fund for Agricultural Development is delivering $200m to poor farmers in the most affected countries to boost food production. The Food and Agriculture Organization needs an additional $1.7bn to help provide seed and fertilizer. The World Bank is doubling its lending for agriculture in Africa over the next year to $800m and is considering a new rapid financing facility for grant support to especially fragile, poor countries and quicker, more flexible financing for others.

Relative to the size and gravity of the crisis, these sums are very modest and affordable for the international community. In the US alone, high prices have been a boon to farmers and have saved the government billions in crop support payments. The world should respond promptly and generously to help those struggling to survive what the UN calls a "silent tsunami."

Third, beyond these immediate actions, new policies are needed to address the underlying causes of the crisis. Crop subsidies and export controls in many important countries are distorting markets and raising prices; they should be eliminated. In particular, subsidies for ethanol that made sense when oil cost $20 a barrel cannot be justified at $120 a barrel - nor can subsidies for oil. They should be phased out together when the price of oil is above a certain level.

Fourth, the current crisis should not deter the world's search for long-term global solutions to poverty and environmental protection. For example, we should continue efforts to move to second-generation fuels made from waste materials and non-food crops without displacing land used food production. Even the limited amount of biofuels on the market today have been credited with reducing the price of oil, and next-generation fuels can be economically advantageous for poor countries with much less effect on food production. As bad as the impact of high food prices has been, the impact of high oil prices has been worse - devastating poor countries that have no indigenous source of supply, erasing all the benefits of international debt relief and more.

Fifth, the world must develop a new system of long-term investments in agriculture.
A new "green revolution" is required to meet the global demands, even as climate change is increasing the stresses on agriculture. More productive crops are needed, but also ones that are drought-resistant and salt-tolerant. The Consultative Group on International Agricultural Research must be strengthened to help lead these efforts.

Sixth, to help fund these important initiatives, I propose that each oil-exporting country create a "poverty and agriculture fund", contributing a fixed amount - perhaps 10% - of the price of every barrel of oil exported. This would be a small fraction of the windfall they have been gaining from higher prices. The funds would be managed by the founding nations and devoted to overcoming poverty, improving agricultural yields, supporting research for new technology, and creating social businesses to help solve the problems of the poor, such as health care, education and women's empowerment.

Just as the US should return a portion of its windfall from grain exports through increased support of food aid, so too should oil-exporting countries contribute a portion of the greatest wealth transfer the world has ever known to help feed the poor.

Thankfully, the Secretary-General and other international leaders are focusing attention on today's crisis, and the world should respond quickly to these calls. But the pressures of a growing and more prosperous population will not go away - demand for food and energy will grow, and the poor will suffer most. The need for long-term investment in agriculture and food aid will grow as well. #

First published in The Guardian, London UK, May 16, 2008

Prof Muhammad Yunus, a Noble laureate in 2006 is founder of Grameen Bank, which has empowered nearly three million former poverty-stricken rural women in Bangladesh. Presently Grameen’s model has been replicated in fifty countries and region