Interview - WFP plans global fund to pre-buy food stocks

from Reuters - Thomson Reuters Foundation
Published on 10 Mar 2009 View Original
By Tim Large

LONDON, March 10 (Reuters) - The U.N. World Food Programme plans to launch a global fund that will allow it to secure food stocks in advance rather than panic-buying when crises hit, the agency's chief said on Tuesday.

Josette Sheeran, executive director of the world's largest humanitarian organisation, said the move would help bring predictability to food aid and prevent distortion of local markets already hit by food-price spikes and the financial meltdown.

"One thing that was revealed last year was that even if we had the contributions (from donors), sometimes we could not buy the food, or we had to buy it from far away," she told Reuters in an interview.

"We were buying food from Brazil to reach East Africa. That's a long trip."

Not only do long journeys bump up costs, but last year WFP had dozens of contracts broken when sellers found they could make a better price just days later.

"So we are looking at instituting an advanced-purchase facility ... where we can buy food and pre-position it six months ahead of the need and buy it when harvests are full, and not during the lean season. We have never been able to do this."

WFP provides food aid to about 100 million of the world's poorest people in some 80 countries. It says it will need $6 billion from donors to meet needs this year, up from $5 billion in 2008.

In the past, the lion's share of WFP aid took the form of in-kind donations from rich countries' surplus stocks, but in recent years it has been buying more and more food locally. Last year, 80 percent of its aid was bought in the developing world, compared to less than 50 percent a decade ago.

Sheeran said they never knew what funding they would get from one year to the next "so often we are spot buyers on markets, scooping up whatever is available. This isn't the best way to conduct the business."

WFP aims to launch the forward-purchasing fund by next month. It will soon be asking donors for seed money to supplement $40 million already given by Saudi Arabia, a WFP spokeswoman said.

Sheeran was in London to attend a British government-backed development conference, where she called for better global mechanisms to protect 1 billion people who go to bed hungry every day.

Those mechanisms include more effective hunger warning systems, improved social safety nets and the possible creation of global humanitarian grain stocks to help countries that can't compete in world markets during price peaks.

"History has shown that for whatever reasons we will need a food insurance net for the world," Sheeran said. "It could be due to a tsunami, or last year it was due to skyrocketing food prices.

"We need to get out of the erratic nature of food aid, so that we can make it a productive investment in societies and we can ramp up in a calmer, more systematic way."

(Editing by Richard Balmforth)

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