Rising food prices curb aid to global poor

Food commodity prices have risen by 21 percent since 2005, which will stretch aid groups' resources.

Rising food prices are threatening the ability of aid organizations to help the world's hungriest people.

Worldwide, basic foods now cost 21 percent more at the wholesale level than in 2005, with key commodities such as grains and oils up more than 30 percent, according to World Bank price indexes.

For poor people, that means the quality and quantity of nutrition are at risk. For relief organizations, it means aid resources are stretched thin.

Typically, donor governments boost their food-relief funding when a crisis demands it. What's happening now is not so much a crisis as a quiet squeeze.

"It's both the rising food prices and the rising cost of freight…. It definitely is affecting what we're able to provide" to people in need, says Lisa Kuennen-Asfaw, a food aid expert at Catholic Relief Services in Baltimore. This year, she says, "every one of our programs has received a little bit less [food] than what they expected."

Retail food prices haven't spiked as much as wholesale prices. But for both aid groups and people in developing nations, the costs have generally been rising. Experts cite several main reasons:

•Growing demand for grains as biofuels is pushing up the price of grains for human and livestock food.

•The success of India and China in lifting millions of their people out of poverty has increased global demand for higher-value foods.

•Rising food demand worldwide has worn down inventories. Stocks of wheat sit at 30-year lows.

•The jump in oil prices since 2004 has rippled into various food-related costs: fertilizer, refrigeration, transport.

So far, the pinch of food inflation isn't cutting directly into emergency relief efforts, say aid groups, including the United Nations's giant World Food Program.

But these groups say they have a shrinking cushion against future disasters such as earthquakes. Moreover, experts say that various logistical challenges prompted US government programs to focus tight resources on emergency needs. That leaves less food aid available for vital long-term programs to help the world's poor.

"The less we're able to help them prepare [to sustain themselves], the more certain it is that there's going to be a need for emergency response in the future," says Ms. Kuennen-Asfaw.

World Vision, another Christian charity, is closing a six-year pilot project in Kenya where the group saw family incomes grow from around $235 a year to $800 a year as cultivation techniques improved. "We were hoping to replicate this successful model in other areas of Kenya where pastoralists are still dependent on emergency rations nearly every year," Walter Middleton, an Africa-based World Vision officer, told a congressional hearing this spring.

Around the world, the lives of some 850 million people are affected by some form of chronic hunger or malnutrition, according to UN estimates.

But much can be done through sustained development aid. As the Kenyan example suggests, programs that provide childhood nutrition, education, and agricultural know-how can pay big dividends. The returns on investment often exceed 20 percent a year, says Christopher Barrett, a Cornell University expert on global poverty and hunger.

"We're passing up very high-return investments, largely because people don't understand them," he says. Even when government support and private charity are tallied together, "we're nowhere near the number of dollars needed … to end chronic hunger."

The World Food Program, working in partnership with private aid groups, provided $3 billion in food aid to nearly 90 million people last year. The lion's share went to emergency and relief operations, while 28 percent of the aid recipients were in development projects.

"We've not been put in a position where we've had to shut down a program or reduce the rations," says Gregory Barrow, a London-based spokesman for the program. But prices "have risen to a point where they're going to have an impact … sooner or later."

In 2001, about $1.2 billion in US food aid went toward nonemergency programs overseas, according to a recent report by Congress's Government Accountability Office. By last year, that number had dropped to $698 million.

Moreover, for all food-aid programs funded by the US government, the volume of food delivered has declined 52 percent in the past five years. Rising transportation and operational costs were key reasons, the report said.

An alliance of nonprofit aid organizations, which partner with the government, hope that Congress's pending farm bill will make funding for long-term relief more secure. That might allow for better advance planning, so that less of the budget goes toward logistics.

Despite the jump in food prices, some development experts point to positive trends as well as challenges. Researchers are better at predicting famines than in the past. The current food-price shock has echoes of the 1970s – when oil prices, bad weather, and growing demand for grains all played a role, says Mr. Barrett at Cornell. But "we've got much better early warning systems in place."

Some experts also hope that higher food prices, and the biofuel boom, might open the door to new opportunities for farmers in developing nations.

Still, most of the 1 billion people living on a dollar a day stand to gain when food prices fall, Barrett says. Even poor farmers are hurt by rising prices, he says, because many buy more food than they sell.

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