Global: Donor response to food crisis inadequate, agencies say

DAKAR, 16 October 2008 (IRIN) - Food security experts say international donors' response to the world's food crisis has been inadequate when compared to interventions to contain the global financial meltdown.

"Huge financial resources have been mobilised by the international community in a matter of days" in response to the global financial crisis, wrote Teresa Cavero in a report by the international NGO Oxfam released on 16 October - World Food Day.

While the US government put up US$700 billion to bail out financial institutions in one day, on 3 October, total global development aid for 2007 was $104 billion, according to Alexander Woollcombe, food security advocacy adviser at Oxfam in Dakar.

This year's food crisis threw an additional 75 million people into hunger and poverty in 2007 according to the UN Food and Agriculture Organization (FAO). The World Bank estimates there are currently 967 million malnourished people in the world.

FAO says the financial crisis, following on the heels of the food price crisis, could deepen the plight of the poor in developing countries.

Remittances dropping

FAO Director-General Jacques Diouf stated in a 15 October news release: "Borrowing, bank lending, official development aid, foreign direct investment and workers' remittances - all may be compromised by a deepening financial crisis."

There are no precise numbers yet about the impact of the financial crisis on developing countries, said Josef Schmidhuber, senior economist at the FAO's Global Perspectives Unit, but he noted that when industrialised countries face a crisis, fewer people work and fewer remittances are sent to developing countries.

"We're already hearing noises from Mexico that fewer remittances are being sent back. These [remittances] are more important than credits and foreign direct investment," he stressed.

Mexico receives $22 billion in annual remittances, and Bangladesh $4 billion, according to Schmidhuber. In Haiti and Honduras remittances make up over 20 percent of gross domestic product (GDP).

Response 'a slow trickle'

The FAO's Schmidhuber said donors promised $20 billion in aid to agriculture at the Rome FAO conference in June 2008, but according to Oxfam, five months on just $1 billion of this has been dispersed. Oxfam's Woollcombe said this is partly because "it takes time to distribute cash for agricultural production. The problem is it is not clear when or where it is actually coming."

The UN has estimated that $25 billion to $40 billion is needed to lessen the impacts of high food prices on developing countries.

"With the new commitments of the financial crisis, I would not be surprised if we don't get much more than the trickle that has arrived so far," said Schmidhuber.

The UK government's commitment of US$ 1.4 billion pledged at the Rome meeting still stands, said Matt Wells, spokesperson for the UK Department for International Development (DFID).

"Yes, there are challenges we are all facing, but we are continuing to call on other donors not to let the economic crisis deflect the fact that we need to remain focused on supporting those most in need," Wells told IRIN.

Building up resilience

To boost vulnerable people's resilience to crises, Oxfam and the Washington DC-based International Food Policy Research Institute (IFPRI) stress the need for donors and international finance institutions to support 'social protection' such as aiding access to health and education, which they say will have a knock-on boost on their food-purchasing power.

Such measures could include targeted cash transfers, nutritional interventions, and fee waivers on targeted services, according to an October World Bank report 'Rising food and fuel prices: addressing the risks to future generations.'

It is the erosion of the global food system's resilience that underlies the food price spikes, according to Steve Wiggins, research fellow at the UK-based Overseas Development Institute.

The world needs to replenish severely depleted global grain reserves, which have dropped from 30 percent to 19 percent of annual grain use, Wiggins said. "Rebuilding stocks would help to calm nerves and restore the resilience of the global food system."

FAO's Schmidhuber said as an alternative to real grain reserves, which are expensive to build and keep up, 'virtual grain stocks' should be developed; developing countries would purchase the right to buy at subsidised prices.

He said such alternatives would lead to a more efficient market that could also protect poor communities, adding that export bans and subsidies in the developed world distort markets and discourage production.

Progress is being made on both sides, he said. "We are starting to see a convergence between the developing and developed world as they shift these opposing approaches."

As the FAO's World Food Security Committee discusses these and other challenges in Rome from 14 to 17 October, Schmidhuber said governments should start by taking a simple step. "They need to do what they've said they are already committed to doing, and deliver the money."