UN food experts call for increased agricultural investment to offset soaring prices

Food prices keep rising

18 February 2011 – Faced with soaring food prices for the second time in three years, senior United Nations experts today called for greater investment in agriculture from both the public and private sectors to increase smallholder productivity.

“Policy-related solutions are also required to increase the longer-term resilience of global agriculture to allow greater levels of supply to markets as demand grows,” UN Food and Agriculture Organization (FAO) Senior Economist Jamie Morrison told a meeting of the UN Economic and Social Council (ECOSOC).

“Particular attention is needed to increase smallholder productivity growth and to their increased integration into markets,” he added, noting that in many countries many smallholders are semi-subsistence producers but net food buyers. “Support to ensure more farmers are willing and able to generate marketable surpluses will be critical in meeting increased demands in the future. To achieve this increased investment is paramount.”

He said public sector investment is needed to establish the basic conditions for productivity growth and this will require a reversal of the decline in aid flows to agriculture and increased national budget allocations, but most of the needed investment will have to come from the private sector in national economies.

David Nabarro, coordinator of Secretary-General Ban Ki-moon’s High-Level Task Force on Global Food Security, cited under-investment among four challenges in the overall food security situation, along with the soaring prices, weather-related disasters such as droughts, floods and fires, and political changes and instability that are disrupting food supply chains.

“A point that we’ve been maintaining now for the last 30 years [is] that there is systematic and serious under-investment in agriculture and food security and that’s a problem now, but it’ll be a much greater problem as we move towards 2015,” he later told a news conference.

All speakers stressed that it was the poorest and most vulnerable who suffered most, with the higher prices taking an exponentially greater bite out of their already meagre resources and forcing them to eat less and less nutritious food and skimp even more on other vital needs such as health and education. But they suggested the situation was not as bad as the 2008 food crisis.

The latest FAO Food Price Index averaged 231 points in January, up 3.4 per cent from December and the highest level since it started in 1990, above 2008. Another measure, the World Bank’s food price index, rose by 15 per cent between October and January and is now only 3 per cent below its 2008 peak. Whichever measure is used, the result is the same: 44 million more people thrown into extreme poverty.

“The situation is extremely precarious,” said Paul Larsen, UN World Food Programme (WFP) Director of Multilateral Relations. “There is every reason for urgency, no reason for complacency. But this time, there will no ‘silent tsunami.’ The situation is different from 2008. The world is aware of the risks. The global community, the UN and Bretton Woods (global financial) system is fully engaged, more coherent and prepared to act.”

Mr. Nabarro told ECOSOC that not all regions are reporting higher food prices and crop harvest and food availability are ample in several poorer countries with grain prices, especially for rice, remaining relatively stable.

“This suggests that we are not in the midst of a world food crisis,” he said. “However, WFP’s assessments of which communities are vulnerable to price rises and supply shortages, and unable to access the nutrition they need, suggest that where prices are higher, the majority of poor families, especially if they lack social protection, are in difficulty.”

He stressed the need to deal with the twin problems of volatility and the impact on the poor in preparing for a crisis response. Volatile prices that move up and down quickly without clear links to market fundamentals of supply and demand make it hard for farmers to make wise decisions about when and how to increase production. He said that speculation played a role in the price rise although it was not yet clear to what extent.

As for those most affected by the price hikes, Mr. Nabarro underscored the need for expanded and improved safety nets enabling vulnerable people to access nutritious food and other basic needs, and cited other response measures such as advance purchases and pre-positioning of stocks.

“It is clear that even if prices stay as they are this year, the need for safety nets will increase and if additional funds are provided now they can be used more efficiently than if they come in the midst of a crisis,” he said.


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