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How can investors help the hungry?

Possible steps include financing small farmers and shunning commodity futures.

By G. Jeffrey MacDonaldCorrespondent of The Christian Science Monitor / August 25, 2008

Lining up: People buy rice in Jakarta, Indonesia. As the price of food rises, investors are hunting for ways to help the needy.

Irwin Fedriansyiah/AP

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When skyrocketing food prices triggered riots in more than a dozen countries from Haiti to Egypt earlier this year, investors committed to pursuing social justice weren't sure what to do.

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"It's hard to figure out who to blame for the food crisis," says Lloyd Kurtz, principal at Nelson Capital Management, a private money-management firm in Palo Alto, Calif., via e-mail from Malaysia. "Social investment has been most influential when there was an actor that could be identified – e.g., the tobacco companies, the South African apartheid regime, etc. But the causes of the global food crisis are multifaceted.… That's probably why you haven't seen a coherent response from the social-investment community."

But some social investors are trying to find ways to tackle a crisis that has pushed an estimated 130 million people into hunger. In June, the Interfaith Center on Corporate Responsibility launched an initiative to tackle food-related issues and propose investing guidelines for the 275 institutional investors in its membership. The project aims to encourage sustainable agriculture worldwide.

Meanwhile, socially responsible (SR) mutual funds are in fact-finding mode. Oxfam America, an antipoverty group, has recently been discussing the food crisis with SR fund staffers.

"A lot of [SR funds] are interested in the issue, but have not yet found the grounds on which they're going to engage different private sector actors who could have an influence, either positively or negatively, on the food crisis," says Rohit Mohani, senior campaigns adviser for Oxfam America.

Relief agencies have long emphasized the need for public-policy measures to alleviate hunger. But because the current crisis bears the private sector's fingerprints on several fronts, food-security experts are offering insights to help investors advance solutions – and avoid compounding problems.

"The mobilization of capital for agricultural growth, especially in the small-farm economy, definitely cannot come only from the public sector," says Joachim von Braun, director general of the International Food Policy Research Institute, a food-security think tank in Washington, D.C. "So the private sector has a very important role to play in order to mitigate and overcome the current food crisis."

To make a positive difference, some food-policy analysts say people need to consider how their investments affect four areas: commodity prices, indigenous farming, biofuel development, and funding and logistical assistance for feeding programs.

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