World warned of 'food crunch' threat

The world faces “the real risk of a food crunch” if governments do not take immediate action to address the agricultural impact of climate change and water scarcity, according to an authoritative report out on Monday.

Chatham House, the London-based think-tank, suggests that the recent fall in food prices is only a temporary reprieve and that prices are set to resume their upward trend once the world emerges from the current downturn.

“There is therefore a real risk of a ‘food crunch’ at some point in the future, which would fall particularly hard on import-dependent countries and on poor people everywhere,” the report states. “Food prices are poised to rise again,” it adds.

The warning is made as agriculture ministers and United Nations officials gather from Monday in Madrid for a UN meeting on food security likely to conclude that last year’s food crisis, with almost 1bn people hungry, is far from over.

The UN will warn ministers in Madrid that “as the global financial crisis deepens, hunger is likely to increase” under the impact of rising unemployment and lower remittances, according to three officials briefed ahead of the meeting.

The prices of agricultural commodities such as rice and wheat jumped to a record high last year, triggering food riots from Haiti and Egypt to Bangladesh and Cameroon and prompting appeals for food aid for more than 30 countries in sub-Saharan Africa.

The cost of food commodities had fallen since then, but Alex Evans, the Chatham House report’s author and an expert at New York University, said that “even at their somewhat diminished levels current prices remain acutely problematic for low-income import-dependent countries and for poor people all over the world”.

Josette Sheeran, head of the UN’s World Food Programme, said she was expecting that this year would be at least as “challenging” as last year, when the number of undernourished rose by 40m to 963m people. “We are not seeing an alleviation of the hunger pressure,” she told the Financial Times.

In addition, agricultural commodities prices have recovered in the past two months on the back of lower winter plantings in the US and Europe and a severe drought in Brazil and Argentina, two of the largest producers of food commodities.

Since December, wheat prices have risen 15 per cent, corn 17 per cent and soyabean 22 per cent. In contrast with other raw materials such as oil or aluminium which have plunged back to the levels of 2002-05, agricultural commodities are trading higher than they were just 12 to 18 months ago.

Over the medium term, the report states that “long-term resource scarcity trends, notably climate change, energy security and falling water availability” will put pressure on prices and production, together with “competition for land and higher demand resulting from increasing affluence and a growing population”.

The report recommends governments to invest more in agricultural production and an increase in international aid in this sphere, too.

Containing global warming will require an additional €175bn in annual investment by 2020, according to a European Union draft paper, writes Joshua Chaffin in Brussels.

The paper, which says much of the €175bn ($227bn, £167bn) investment will have to be borne by the developed world, also forecasts that tens of billions of euros in spending will be needed to help poorer countries prepare for even moderate warming.

Some of the ways that the EU proposes to raise those funds include requiring developed nations to pay for their annual carbon emissions, and levying taxes on aviation and maritime transportation. The EU should also expand its emissions trading system into a global carbon market and explore the establishment of a multilateral insurance pool to help deal with natural disasters that result from global warming.

The final paper, to be released by the European Commission, the EU executive body, on Wednesday, sets out the bloc’s position ahead of negotiations in Copenhagen this December aimed at creating a global agreement to fight climate change.

The Commission declined to comment on the draft, and people involved in negotiations said it was still under discussion.

The EU endorsed a plan in December to reduce the 27-nation bloc’s greenhouse gas emissions by 20 per cent from 1990 levels by 2020. Member states and other developed countries are urged to increase that figure to 30 per cent.

By: The Financial Times Limited 2009

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