Rising prices tip balance of poverty

from the New Zealand Herald

British Prime Minister Gordon Brown has called for a co-ordinated response led by the United Nations, World Bank and International Monetary Fund to address soaring food prices.

In an April 8 letter, Brown asked Japanese Prime Minister Yasuo Fukuda, as chair of the Group of Eight industrial nations, to request the international agencies develop a global strategy to address the problem of rising food costs.

"For the first time in decades, the number of people facing hunger is growing," Brown wrote in the letter ahead of World Bank and IMF meetings in Washington this weekend.

"The international community needs a fully co-ordinated response," he added. "I would propose that you, as chair of the G8, ask the World Bank, the IMF and the UN to urgently work together to lead the development of an international strategy to address all the elements of this crisis."

Among the responses he cited was a redoubling of efforts to reach a Doha global trade deal, improving agricultural output in developing countries, boosting support for farm research and examining the impact of different biofuels methods.

Brown also called for World Bank and IMF financial support for countries facing balance of payments difficulties because of the price hikes. He said market-based risk management instruments, including derivatives, could also be considered to avert food price volatility.

In addition, urgent action was needed to explore the impact of climate change on the livelihoods of the poor, he said.

A combination of rising fuel costs, more demand for food in wealthier Asia, the use of farmland and crops for biofuels, bad weather and speculation on futures markets have all pushed up food prices, prompting violent protests in a handful of poor countries.

In the latest rioting, at least five people were killed in a week of demonstrations in Haiti over the rising costs of food, while unions in Burkina Faso in West Africa called a general strike over the rising cost of living.

Brown's letter came as the World Bank said on Wednesday that rising global food costs are not a temporary phenomenon and prices are likely to stay above 2004 levels until 2015 for most crops.

World Bank President Robert Zoellick said he feared the higher food prices would reverse declining poverty levels in some countries. Last week, he also called for a global response to tackle the food crisis.

The bank suggested the least disruptive policy response to dealing with higher prices was for countries to introduce or expand cash transfer programmes to the poor.

The World Bank said there had been a sharp surge in domestic food price inflation, especially in Sri Lanka (34 per cent), Costa Rica (21 per cent) and Egypt (13.5 per cent).