Food crisis moves up global agenda at IMF, World Bank meets
Rising food prices and their threat to political stability and development gains captured the attention of world economic leaders meeting in Washington, with a call to arms launched by the World Bank.business Updated: Apr 14, 2008 10:03 IST
Rising food prices and their threat to political stability and development gains captured the attention of world economic leaders meeting in Washington, with a call to arms launched by the World Bank.
The issue steadily gained prominence during the International Monetary Fund and World Bank spring meetings over the weekend that mainly were focused on the unfolding global financial turmoil and deteriorating economic growth prospects.
The Group of Seven industrialized nations made only passing mention of the issue, disappointing those who felt the problem needs the political commitment and leadership of the rich countries to be resolved.
The IMF meanwhile called for a united front to put the reeling world economy back on track, saying "policymakers should continue to respond to the challenge of dealing with the financial crisis."
For his part, World Bank president Robert Zoellick said millions of people could be at greater risk because of soaring food costs and urged governments to act now so that a bigger price would not have to be paid later.
"We estimate that a doubling of food prices over the last three years could potentially push 100 million people in low-income countries deeper into poverty," Zoellick said at the end of the World Bank spring meeting on Sunday.
"This is not just a question about short-term needs, as important as those are. This is about ensuring that future generations don't pay a price too."
IMF head Dominque Strauss-Kahn warned: "As we know, learning from the past, those kind of questions sometimes end in war."
Even as the IMF and World Bank met over the weekend, there were more protests in developing countries against the soaring price of food, especially in Haiti where the prime minister was forced from office as a result.
For Elizabeth Stuart, senior policy adviser in Washington for charity Oxfam International, the high-profile comments from the IMF and World Bank, however welcome, still left the food problem lower down the agenda.
"It is very improtant that Dominique Strauss-Kahn and Zoellick put the spotlight on the issue," Stuart told AFP.
At the same time, "it is clear the IMF and World Bank cannot deal with the problem alone and it needs the involvement of the G7 to get the political leadership involved," she said.
The G7 -- Britain, Canada, France, Germany, Italy, Japan and the United States -- did note rising commodity prices in their meeting statement but then focused on measures to bolster the financial system in the face of what Strauss-Kahn called the worst crisis since the 1930s Great Depression.
Prices of basic foodstuffs have risen sharply in recent months, sparking violent protests in many countries, including Egypt, Cameroon, Ivory Coast, Mauritania, Ethiopia, Madagascar, the Philippines and Indonesia.
A World Bank report last week said global wheat prices jumped 181 percent over the 36 months to February, with overall food prices up 83 percent.
In Pakistan and Thailand, troops have been deployed to prevent the seizure of food, especially rice, from fields and warehouses.
Asked about rice supply problems in Asia, where some exporters are holding back shipments to protect their own markets, a senior IMF official said such action should be avoided while market forces would resolve the issue in time.
"I think the best sort of response is to allow market forces to operate, to allow prices to rise so that there can be a supply response," David Burton, director of the IMF Asia and Pacific Department, said Friday.
"I think historical experience suggests that you would expect to see a significant (production) response to the sort of price increases we have seen," he added.
For Stuart of Oxfam, market forces seem well short of the answer.
"The problem is absolutely structural," she said, citing current trading patterns, the impact of growing biofuel demand on food supply and climate and environmental changes.
"Market forces are clearly not sufficient," she said, stressing the need for political leadership to get more funds and assistance directed straight at the problem.