"Financial Meltdown Worsens Food Crisis: As Global Prices Soar, More People Go Hungry"

Source: Ariana Eunjung Cha and Stephanie McCrummen, The Washington Post, October 26, 2008

Excerpts:

Oxfam, the Britain-based aid group, estimates that economic chaos this year has pulled the incomes of an additional 119 million people below the poverty line. Richer countries from the United States to the Persian Gulf are busy helping themselves and have been slow to lend a hand........

The U.N. Food and Agriculture Organization estimates that 923 million people were seriously undernourished in 2007.......

Commodity prices have plummeted in recent weeks as investors have shown increasing concern about a global recession and a drop in the demand for goods. Wheat futures for December delivery closed at $5.1625 on Friday -- down 62 percent from a record set in February. Corn futures are down 53 percent from their all-time high, and soybean futures are 47 percent lower. Such declines, while initially welcomed by consumers, could eventually increase deflationary pressures -- lower prices could mean less incentive for farmers to cultivate crops. That, in turn, could exacerbate the global food shortage........

In June, governments, donors and agencies gathered in Rome to pledge $12.3 billion to address the world's worst food crisis in a generation. But only $1 billion has been disbursed. An additional $1.3 billion, which had been earmarked by the European Commission for helping African farmers, is tied up in bureaucracy, with some governments now arguing that they can no longer afford to give up that money.

Comment: This looks very complicated. In the short term, the price of food has gone down, but so too has the funding available for food aid.

In a time frame of a couple of years, I worry about both the cut back in farmer plantings reducing supply, and the impact of the financial crisis in developing nations reducing the ability to buy food, as well as a cut in donor funding.

Agriculture may be in serious trouble? JAD