Saturday, October 9, 2010

Food prices, hunger and food security

Dear Colleagues

The matter of food security is very important ... and it is good to see global food security being made a priority in the US administration.

Hopefully the initiative, the Global Agriculture and Food Security Program will be adequately funded, but more important, hopefully it will be implemented in a manner that works.

On this score the signs are not good. I am no fan of the World Bank and its usual implementing modalities ... some of the issues are related to its mandate and what it is allowed to do, and some are of its own choosing. My experience suggests that the World Bank makes projects too big and too complicated and then expects government agencies that are underfunded and lacking in capacity to be in charge. Compounding the design and implementation issues, the World Bank has amazingly weak accounting for performance, even though the procedural overhead is immense. The World Bank has had the mandate to do work on agriculture and food security for a very long time ... and a priority sector since the 1970s ... and results have been poor.

My experience in many developing countries suggests that agricultural production will be significantly improved when development investment is based on multi-sector development analysis with community focus and there are strong local metrics about progress and performance. This is about as different from the infamous World Bank project cycle management as it can be ... and it is not at all clear whether the World Bank has a mandate to support such a development approach.

The Global Agriculture and Food Security Program sounds like a good idea. It came about in 2008 when food prices in many developing countries were rising dramatically and the poor were becoming hungrier. I am not at all satisfied that the commitment to this new program was made with much understanding of why food shortages were developing and prices were rising. My work suggests that the food sector is a lot like the banking sector ... essentially all about profit and very little about value.

If poor hungry people who are economically unemployed or underemployed were able to grow some food for themselves and the local market ... a lot would be different ... and food security would be a whole lot better than it is at the moment. Large scale industrial agriculture is very productive in terms of yield per acre and per person employed ... but the value chain of this food source is unsustainable when perhaps as many as 4 billion people cannot afford to buy the food. It would make a whole lot more sense for these billions to be engaged in food production so that they have their local food sources.

Modern science can help distributed micro-farming ... and investment can help distributed micro-farming. The Global Agriculture and Food Security Program would be really worthwhile if it can be used to fundamentally restructure the production, distribution and storage of food along lines that result in more socio-economic value for all concerned.

Below is the text of the message that provoked these thoughts.

Peter Burgess

U.S. Seeks Supporters for $1 Billion Global Food Security Fund, Lago Says By Rebecca Christie - Oct 6, 2010 5:44 AM GMT+0530
Posted by Murugan K on October 9, 2010 at 8:48am

The U.S. wants to raise $1 billion for a global food security fund by appealing to countries that will meet in Washington this weekend to discuss world financial issues, an Obama administration official said today.

Marisa Lago, the Treasury Department’s assistant secretary for international affairs, said the U.S. will ask for money to help farmers in the world’s poorest countries at International Monetary Fund and World Bank meetings beginning Oct. 8. The same pitch will be made to Group of 20 finance ministers, central bankers and world leaders when they meet over the next few weeks, she said.

At stake is the Global Agriculture and Food Security Program, an international effort to deliver rapid and dependable financing for farmers. Supported by the Bill & Melinda Gates Foundation, the fund was created following a G-20 meeting in Pittsburgh in 2009, and is administered by the World Bank.

Food prices spiked in 2008, triggering unrest in poorer countries such as Haiti and Egypt. The United Nations said at the time that some governments had not invested enough in the production of food crops for local markets.

The new fund, so far, has $880 million in pledges but only $120 million remaining in the bank, Lago said. Five grants were recently approved -- totaling $224 million -- to Bangladesh, Haiti, Rwanda, Sierra Leone and Togo to help enhance productivity and train farmers. Lago said the fund has received requests for close to $1 billion more in aid.

Initial Donors

The United States, Canada, South Korea and Spain were among the initial donors. This weekend, the Obama administration, which has pursued food security in poor countries as an initiative, will approach European nations and other developed countries, she said.

“Unless new donors come forward, we’re going to have to turn away or push off strong applicants,” Lago told reporters at a press briefing in Washington today. “We don’t kid ourselves about the challenge.”

World Bank President Robert Zoellick yesterday said the developing world continues to struggle with a food crisis that has gone on since 2008.

“Recent prices are a serious cause for concern,” he said in a conference call with reporters. “ The rise in wheat prices over the last few months is affecting the price of other staples due to increased demand for substitutes. So, we’ll have to find a way to avoid food crises becoming the new normal.”

Wheat futures are up 38 percent since the end of June. Wheat futures for December delivery rose today 16.25 cents, or 2.5 percent, to settle at $6.635 a bushel at 1:15 p.m. on the Chicago Board of Trade, the first gain since Sept. 24. During the previous six sessions, the grain dropped 10 percent in part as drought-damaged crops in Russia and Eastern Europe received rain.

To contact the reporters on this story: Rebecca Christie in Washington at;

To contact the editors responsible for this story: Christopher Wellisz at

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