ADDIS ABABA, February 3, 2011 -- The rise in food prices in Africa and elsewhere around the world is not as dire today as it was during the 2007-2008 crisis, a panel of key partners funding African agriculture concluded on the sidelines of the African Union summit. Today, the fundamentals of the global food supply remain sound but a lack of transparency on existing supplies has allowed speculators to use food as a commodity to make money by driving up the price for consumers.
Meeting over breakfast at the behest of the World Bank, representatives of the United Nations Food and Agriculture Organization, the World Food Program, and the African Development Bank, exchanged ideas on how to best reinvigorate the partnership, coordination, and swift assistance to countries which made the response to the 2007-2008 food crisis so effective.
“A combination of the right short-term emergency assistance to the hardest-hit countries and medium-term policy responses following the 2007-2008 food crisis generated the bumper harvests many countries have experienced and has to be credited with cushioning the impact of the ongoing rise in food prices,” World Bank Vice President for the Africa Region, Obiageli Ezekwesili told the forum.
“With wheat stocks at 1,100 million tons – double the stock in 2008 – and oil prices not as high as they were in 2008, the current rise in food prices is at odds with such fundamentals of the global food market,” said the Director General of the Food and Agriculture Organization Jacques Diouf. Forest fires, drought, prospects of low future harvests and the ban of wheat exports in Russia, triggered unjustified panic in the global food market, said Diouf.
“Agriculture is the next big thing for Africa after the information technology revolution,” Ezekwesili said, adding that private capital, which has worked so well for Africa’s revolutions in telecom and Information and Communications Technology (ICT), will even do more in “Africa’s foremost area of competitive advantage: agriculture.”
Stressing the potential for agriculture to bring about transformational change, World Bank Managing Director Ngozi Okonjo-Iweala, cited the interest shown by giant global retailers such as the United States-based Walmart to source their food directly from smallholder farmers. The Bank, she explained, has kept in place the mechanisms it used to help countries tackle the 2007-2008 food crisis.
The forum agreed that African governments, private sector investors and donors need to pay close attention not to tip the balance against smallholder farmers compared to commercial farmers; not to lock women in the role of producers, while men become the “money makers” when it comes to marketing; and not to hurt food security and nutrition generally guaranteed by the female farmer by focusing too narrowing on large scale modern and mechanized farms owned predominantly by men.
Despite challenges from natural events including harsh drought in the Horn and East of Africa and floods in West and Southern Africa, some of the gains are making a difference. For example, under a pilot program “Purchasing for Progress” aimed at linking African smallholder farmers to markets and consumers, the World Food Program (WFP) has sourced an estimated USD$1 billion worth of humanitarian food supplies directly from African farmers over the last three years, WFP Deputy Executive Director Shiela Sisulu told the gathering. Half of the purchases were from member states of the Common Market for Eastern and Southern Africa (COMESA).
“Purchases from Uganda and Ethiopia were a total $40 million and $50 million respectively,” Sisulu explained.
The forum discussed some of the key setbacks, including the introduction of price controls and food export bans; the difficulty of moving food across borders; the high costs of transport; the failure to respect global standards and quality; and the high loss – estimated at 35 percent of food supplies – which occurs during the post-harvest, transport to market, storage, processing and conservation phases.
Some successful approaches, such as the use of cash vouchers to help poor families afford food during the 2007-2008 crisis are being re-tooled by WFP, which recently launched electronic vouchers. Provided via so-called “scratch cards” similar to those used to recharge credit on mobile phones, they allow WFP to pick up the amount estimated in excess of affordable grocery prices for the most needy families.
The FAO’s Diouf said countries need to meet three major challenges to mitigate what Okonjo-Iweala described as the “frightening” but real prospects that “we must learn to live with food price volatility.”
The first, Diouf said, is to ramp up investments beyond the estimated $22 billion pledged by the G20 during their 2009 summit in Pittsburgh. Significantly higher investments must be made if the world is to avoid the reality of the forecast made at the 2002 World Food Summit that the aim of halving world hunger by 2015 will only be met in 2150. He called for programs that mirror those implemented by the World Bank under former President Robert McNamara which included providing irrigation, storage, farm-to-market roads, bringing about India’s Green Revolution, and working in Asia and Latin America to avoid famine. While private sector investments are important and should be made in a responsible way, Diouf stressed that it is foremost the responsibility of developing countries to plough the most money into the sector.
“African countries must do everything to honor the commitments they made in Maputo in 2002 to raise the share of their national budgets devoted to agriculture to at least 12 percent – a feat currently realized by only seven to eight African countries,” an official from the African Development Bank, said speaking on behalf of its President Donald Kaberuka.
The second issue to tackle, according to Diouf, is unfair trade, which he blamed in part on the lavish annual subsidies - $360 billion in all – paid by rich countries to their farmers. The amount, which includes $13 billion in subsidies to biofuels, which diverts food into supporting transport, is way above the official development assistance (ODA) investment needs of these countries estimated at only $45 billion, according to the FAO.
The third issue, according to Diouf, is to prevent unscrupulous profit seekers from exploiting lax regulations or excessive deregulation to speculation on food as a commodity just to make money.
African agriculture, the forum stressed, should not be modernized at the detriment of gender just as the aggregation of farms to achieve economies of scale is not done on the backs of women.
Wrapping up the session, Ezekwesili highlighted the three areas participants said they would like to meet again to pursue further. The first is to merge the dialogue between partners who met in Addis Ababa to another group made of big African commercial farms and banks which met a fortnight earlier at the World Bank headquarters in Washington, D.C, and left agreeing to meet again in six-to-nine months.
The second is for partners to help sharpen the focus on boosting agricultural productivity in ways that the sector creates jobs along the entire value chain and find ways of improving the investment climate so as to attract big global players and take advantage of innovative approaches like those offered to farmers by the Ethiopian Commodities Exchange.
The third issue tabled for further work is the pertinence of sharing knowledge on how to lift obstacles to food trade, including within Africa, and – if necessary – pushing for special dispensations for sourcing and moving humanitarian supplies across borders.
FAO Chief Jacques Diouf probably spoke for everyone at the forum when he insisted: “The problems of agriculture may be those of agriculture ministers. However, the solutions to the problems of agriculture can only be found through the involvement and support of other ministers: finance, public works, infrastructure; trade and other cabinet members.”
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