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Poorer farmers not benefiting from food price rise

world Updated: Apr 29, 2008 16:59 IST
Laura MacInnis

Crops are fetching far higher prices in markets worldwide, but farmers in poor countries have not seen their incomes rise as a result, international officials said on Tuesday.

World Bank President Robert Zoellick said that increases in fertiliser and fuel costs had kept many poorer producers from meeting the huge demand for food staples that has driven up prices and caused shortages, hoarding, hunger and riots.

"The data we have so far suggests that it has had little effect," the former U.S. trade chief told a news conference in Berne, where United Nations leaders met this week to chart a way out of the current food crisis.

"Even in some areas where people know that prices are higher, they are not planting more because they are fearful that they face very high input costs," Zoellick said.

Many farmers committed to selling their harvests at rates fixed before the recent dramatic increase in wheat, corn, rice, dairy, and oils prices, which economists have linked to a myriad of factors including drought, the use of crops for biofuels, and speculation by commodity traders and hedge funds.

And in the poorest corners of the world, where people spend up to 75 percent of their incomes on staple foods, only a tiny proportion of farmed crops are sold on the market, according to analysis by the Washington-based development lender.

"Farmers in poor countries tend to self-consume a large share of their output, and benefit from price increases only on the portion they sell," the World Bank research found.

"Household surveys show that many poor people are net buyers of staple foods, even in rural areas."

International trade

The Food and Agriculture Organisation estimates the world price for foods such as cereals, dairy, produce, meat, sugar and oils was 57 percent higher last month than in March 2007.

U.N. Secretary-General Ban Ki-moon called the price climb "an unprecedented challenge of global proportions." He and 27 international agency heads meeting in the Swiss capital on Tuesday pledged to create a task force to cope with the commodity shifts that have severely hindered efforts to buy and distribute food aid for millions of the world's poorest people.

The World Trade Organisation (WTO) has been striving for seven years to conclude a new accord to slash the tariffs and subsidies skewing the global prices of agricultural goods and making it hard for poor-country farmers to sell their crops abroad.

WTO Director-General Pascal Lamy, who also took part in the food crisis meeting convened by Ban, said it was unrealistic to expect that farmers would immediately benefit from the several-fold increase in food staple prices.

Ramping up food production, and matching crops with the goods in highest demand, would take more time and depend on fair and clear international trade rules, Lamy said.

"If you want supply to increase then you have to make sure that trade works," he said, stressing that a successful conclusion of the WTO's Doha round accord could help achieve this.

"I believe that today's call for action under the auspices of the U.N. Secretary-General can help WTO members gathering the necessary political energy in order to help developing countries to increase their food production capacity."

(Editing by Jonathan Lynn and Keith Weir)