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FAO 2011 October Food Index down, food prices still up, what’s going on?

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FAO has released its Food Price Index for October 2011, saying the index has dropped dropped to an 11-month low, declining 4 percent, or nine points, to 216 points from September. Indeed the index has dropped, declined and has certainly not risen. But does this mean food prices for the poor in many countries, for labour, for informal workers, for cultivators too – has the cost of food dropped for any of them?

The answer is a flat and unequivocal ‘No’. FAO has said so too: “Nonetheless prices still remain generally higher than last year and very volatile.” At the same time, the Rome-based food agency has said that the “drop was triggered by sharp declines in international prices of cereals, oils, sugar and dairy products”.

The FAO has said that an “improved supply outlook for a number of commodities and uncertainty about global economic prospects is putting downward pressure on international prices, although to some extent this has been offset by strong underlying demand in emerging countries where economic growth remains robust”.

Once again, the FAO is speaking in two or more voices. It should stop doing so. A very small drop in its food price index does not – repeat, does not – indicate that prices for food staples in the world’s towns and cities has dropped and people can afford to buy and cook a square meal a day for themselves and their children. Not so at all.

I am going to contrast what FAO has said about its October food price index with very recent reportage about food and food price conditions in various parts of the world.

FAO: “In the case of cereals, where a record harvest is expected in 2011, the general picture points to prices staying relatively firm, although at reduced levels, well into 2012. International cereal prices have declined in recent months, with the FAO Cereal Price Index registering an eleven month-low of 232 points in October. But nonetheless cereal prices, on average, remain 5 percent higher than last year’s already high level.”

Business Week reported that rising food prices in Djibouti have left 88 percent of the nation’s rural population dependent on food aid, the Famine Early Warning Systems Network said. A ban on charcoal and firewood production, which provides about half of the income of poor people in the country’s southeast region, may further increase hunger, the Washington- based agency, known as Fewsnet, said in an e-mailed statement today. Average monthly food costs for a poor urban family are about 33,907 Djibouti francs ($191), about 12,550 francs more than the average household income, Fewsnet said. Urban residents in the Horn of Africa nation don’t receive food aid, it said.

FAO: “According to [FAO’s November 2011] Food Outlook prices generally remain ‘extremely volatile’, moving in tandem with unstable financial and equity markets. ‘Fluctuations in exchange rates and uncertainties in energy markets are also contributing to sharp price swings in agricultural markets,’ FAO Grains Analyst Abdolreza Abbassian noted.”

A Reuters AlertNet report quoted Brendan Cox, Save the Children’s policy and advocacy director, having said that rising food prices are making it impossible for some families to put a decent meal on the table, and that the G20 meeting [currently under way in Cannes, France] must use this summit to agree an action plan to address the food crisis. Malnutrition contributes to nearly a third of child deaths. One in three children in the developing world are stunted, leaving them weak and less likely to do well at school or find a job. Prices of staples like rice and wheat have increased by a quarter globally and maize by three quarters, Save the Children says. Some countries have been particularly hard hit. In Bangladesh the price of wheat increased by 45 percent in the second half of 2010. In new research, Save the Children analysed the relationship between rising food prices and child deaths. It concluded that a rise in cereal prices – up 40 percent between 2009 and 2011 – could put 400,000 children’s lives at risk.

FAO: “Most agricultural commodity prices could thus remain below their recent highs in the months ahead, according to FAO’s biannual Food Outlook report also published today.  The publication reports on and analyzes developments in global food and feed markets. In the case of cereals, where a record harvest is expected in 2011, the general picture points to prices staying relatively firm, although at reduced levels, well into 2012.”

IRIN News reported that food production is expected to be lower than usual in parts of western Niger, Chad’s Sahelian zone, southern Mauritania, western Mali, eastern Burkina Faso, northern Senegal and Nigeria, according to a report by the World Food Programme (WFP) and the Food and Agriculture Organization (FAO), and a separate assessment by USAID’s food security monitor Fews Net. “We are worried because these irregular rainfalls have occurred in very vulnerable areas where people’s resilience is already very weakened,” said livelihoods specialist at WFP Jean-Martin Bauer. Many Sahelian households live in a state of chronic food insecurity, he said. “They are the ones with no access to land, lost livestock, without able-bodied men who can find work in cities – they are particularly affected by a decrease in production.” A government-NGO April 2011 study in 14 agro-pastoral departments of Niger noted that pastoralists with small herds lost on average 90 percent of their livestock in the 2009-2010 drought, while those with large herds lost one quarter. Those who had lost the bulk of their assets have already reduced the quality and quantity of food they are consuming.

FAO: “Food Outlook forecast 2011 cereal production at a record 2 325 million tonnes,  3.7 percent above the previous year. The overall increase comprises a 6.0 percent rise in wheat production, and increases of 2.6 percent for coarse grains and 3.4 percent for rice. Globally, annual cereal food consumption is expected to keep pace with population growth, remaining steady at about 153 kg per person.”

The Business Line reported that in India, food inflation inched up to 11.43 per cent in mid-October, sharply higher than the previous week’s annual rise of 10.6 per cent, mainly on account of the statistical base effect of the previous year. Inflation in the case of non-food items and the fuels group, however, eased during the latest reported week. According to data released by the Government on Thursday, an increase in the year-on-year price levels of vegetables and pulses contributed to the surge in the annual WPI-based food inflation for the week ended October 15, apart from the base effect. Sequentially food inflation was up 0.25 per cent.

FAO: “The continuing decline in the monthly value of the FAO Cereal Price Index reflects this year’s prospect for a strong production recovery and slow economic growth in many developed countries weighing on overall demand, particularly from the feed and biofuels sectors.”

Al Ahram reported that Egyptian household budgets had mixed news in September with prices for some basic foods tumbling month-on-month and others showing small climbs, according to state statistics agency CAPMAS. Figures released this week show the price of local unpacked rice fell 15.6 per cent to LE4.96 per kilo between August and September 2011. It was the commodity’s first decline in nearly a year, although the per kilo price remains 68 per cent higher than the LE2.95 that rice cost in October 2010. Chicken also fell 5.8 per cent to LE16.26 per kilo between August and September. Other staples, however, continued to rise; the price of potatoes climbed 14 per cent to LE4.89 per kilo, while a kilo of tomatoes gained a monthly 14.8 per cent to cost LE4.65.

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Why drought and hunger in Africa spells opportunity for global agri-tech

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Agriculture in Africa. Photo: FAOClimate change is leading to more intense drought conditions in Africa. Small and marginal farmers, pastoralists and nomadic communities are the most vulnerable and the hardest hit. Already. aid agencies have warned that 10 million people are already facing severe food shortages, particularly in the landlocked countries of Chad and Niger, after a drought led to the failure of last year’s crops. As many as 400,000 children are at risk of dying from starvation in Niger alone, according to Save the Children.

The Independent of Britain has reported that unusually heavy rains have washed away this year’s crops and killed cattle in a region dependent on subsistence agriculture. Organisations including Oxfam and Save the Children say that the slow international response to the emergency means that only 40 per cent of those affected are receiving food aid. As many as four out of five children require treatment for malnutrition in clinics.

Against this grim new news, the global agri-technology networks are readying plans to use possible food shortages to push new structures of seed, funding and conditions onto countries looking for quick fix solutions. One such programme ia the Comprehensive Africa Agriculture Development Programme (CAADP) which has announced that it received a major boost as several countries have begun drawing on funds from a US$22 billion pledge made by the G8.

Agriculture in Africa. Photo: FAOUnder CAADP, African governments are committed to increase their national budget expenditure on agriculture to at least 10 percent. The Programme, agreed by heads of state at the 2003 summit of the African Union, expects a six percent growth rate in agriculture every year. What part of this growth will meet the needs of the drought-hit people in Chad and Niger is not discussed.

Close behind is the International Maize and Wheat Improvement Center (known by its Spanish acronym CIMMYT, one of the CGIAR centres) which has used the alarming food situation news as a prop on which to announce a study which it says “finds widespread adoption of recently developed drought-tolerant varieties of maize could boost harvests in 13 African countries by 10 to 34 percent and generate up to US$1.5 billion in benefits for producers and consumers“. Who will these producers and consumers be?

The study was conducted as part of the Drought Tolerant Maize for Africa Initiative (DTMA) implemented by CIMMYT and IITA with funding from the Bill & Melinda Gates Foundation and the Howard G. Buffett Foundation. CIMMYT and IITA have said they “worked with national agriculture research centers in Africa to develop over 50 new maize varieties that in drought conditions can produce yields that are 20 to 50 percent higher than existing varieties”. There is no mention of Africa’s immense wealth of traditional cereals or the communities that have guarded and used old growing knowledge in difficult times.

Agriculture in Africa. Photo: FAOFinally, from August 30 to September 4, Namibia hosted the annual Food, Agriculture and Natural Resources Policy Analysis Network (FANRPAN) Regional Food Security Policy Dialogue, where over 200 policymakers, farmers, agricultural product dealers, scientists and non-governmental organisations from across Africa and the world gathered “to address African priorities on climate change and its impacts on food security, agricultural development and natural resource management”.

The tone and tenor is astonishingly upbeat, especially considering the dreadful food situation and climate change news that’s now coming out daily from central, eastern and north Africa: “Increasing the collaboration between public and private sector organisations can also help build infrastructure, secure better access to natural resources, improve the distribution of agricultural inputs and services, and share best practices. The Farming First coalition is a successful example of farmers, scientists, engineers, industry and agricultural development organisations coming together to push for improved agricultural policies which benefit farmers while safeguarding natural resources over the long term.”

FANRPAN has cited two reports by consulting firm McKinsey and Company which have (1) estimated that Africa produced only 10 percent of the world’s crops despite representing a quarter of land under cultivation and (2) noted that 60 percent of the world’s uncultivated arable land lies in Africa with the potential for African yields to grow in value more than three-fold by the year 2030, from US$280 billion today to US$880 billion.

Agriculture in Africa. Photo: FAOThose extraordinarily large sums may explain why FANRPAN is currently working in partnership with the Rockefeller Foundation “to improve food security throughout sub-Saharan Africa by promoting the understanding of climate change science and its integration into policy development and research agendas”. FANRPAN said it is also working with the International Food Policy Research Institute (IFPRI) – a study cell based in Washington, USA, whose research objectives have tended towards international agricultural trade in recent years. A recent collaboration is called ‘Strategies for Adapting to Climate Change in Rural sub-Saharan Africa: Targeting the Most Vulnerable’ which says it recognises the interrelated impact of climate change on household poverty, hunger and food security.

No doubt, but these high-minded statements of objectives come bundled with some decidedly commercial conditions. As IPS news reports, there are conditions attached to how countries will be accessing CAADP funds. Countries will need to have gone through the CAADP process, which includes designing a “national investment plan” which contains detailed and fully-costed programmes and signing a “CAADP compact”. This is nothing but an agreement between the government, regional representatives and “development partners” for “a focused implementation of the programme”. Moreover, the investment plans will have to undergo “an independent technical review” and the plan should also “have been tabled before a high-level CAADP business meeting” before funds are allocated. Which simply means that there are only so many ways the money can move.

Agriculture in Africa. Photo: FAOFor all these noble programmes, the countries in their sights are: Angola, Benin, Ethiopia, Ghana, Kenya, Malawi, Mali, Mozambique, Nigeria, Tanzania, Uganda, Zambia and Zimbabwe. The aid agencies on the ground are warning again what they have said last year, the year before, five years ago, a decade ago. “After six months without proper nutrition, these children have little resistance to disease,” said Severine Courtiol, Save the Children’s Niger manager. “There is little children can do to avoid coming into contact with this contaminated, disease-ridden floodwater. That’s why it’s critical we make sure they get enough food so they are strong enough to fight off and recover from sickness.”

Robert Bailey, Oxfam’s west Africa campaigns manager, said that some food was available in marketplaces in Niger, but was too expensive for ordinary households to afford. As a result, many were reduced to eating leaves and berries. Chad and parts of Mali were also affected, he added. “The international donor response has been too little too late. We estimate that 7.9 million people are affected by food shortages in Niger, with only 40 per cent receiving international aid. The other 60 per cent are dependent on the government and NGOs [non-governmental organisations]. But the government has no food.”