Food Crisis Erases Ethiopians' Gains; Risks Health

from Bloomberg

By Bill Varner and Jason McLure
Shagay Shanko and her husband left a struggling family farm in southern Ethiopia 12 years ago to seek work in the nation's capital. The couple found construction jobs that paid $2 a day, enough to add meat to their diet.

``It used to be good,'' Shanko, 25, said of their lives in Addis Ababa. Not any more. Soaring food prices mean they can't even afford injera, a nutritious, spongy bread that is a staple of Ethiopian cooking. Their three children eat only two meals a day, and the family relies on government-subsidized wheat to stave off hunger.

Millions of people in Ethiopia and dozens of nations from Bolivia to Indonesia were on a path out of poverty before the food crisis. Now they are at risk of backsliding amid the surge in prices for wheat and other commodities, according to the World Bank and aid groups. Vulnerable developing economies might shrink as much as 10 percent because of malnutrition and falling school attendance, a United Nations study found.

Ethiopia, where the economy last year grew by almost 10 percent after recovering from droughts and a border war with neighboring Eritrea, is one of 21 African nations that might regress. Annual inflation in Ethiopia climbed to 29.6 percent in March, the highest in more than a decade, on food costs.

``Feeding 6.7 billion people is no easy task,'' Jeffrey Sachs, director of the Millennium Villages Project at the Earth Institute at Columbia University, said in London today.

Rapid Global Growth

Shortages are mainly caused by ``rapid global growth, against a backdrop of tightening biophysical constraints without a systematic understanding or a systematic view of what to do,'' he said. ``We have a world population that has increased 10 times in the last two centuries,'' he said in a speech to promote his new book, ``Common Wealth: Economics for a Crowded Planet.''

Countries ``getting their economic house in order'' are at greatest risk, Divya Reddy of the Eurasia Group, a New York-based political-risk consulting firm, said in an interview. ``They face tough policy choices, such as putting reforms on hold or increasing food subsidies that compromise other budget priorities.''

Relief officials fear that 1 billion impoverished people worldwide will be hurt for a generation as they have less to spend on medical care and education. Illnesses will spread and fewer children will attend school, according to John Holmes, the UN's emergency-aid chief.

``It is the perfect storm of rising hunger and lack of availability of food,'' Holmes said in an interview. ``It is serious, it is structural, it will last a long time, and we don't have any experience in how to deal with it.''

Emergency Food Aid

As many as 9 million Ethiopians in a nation of 80 million that is sub-Saharan Africa's second-most populous will need emergency food aid this year, according to the U.S. Agency for International Development. That is six times more than the 1.4 million fed last year by the Rome-based World Food Program.

Ethiopia's government, which unlike Sudan and Angola has no oil production to offset the economic damage, is trying to lower food prices. It will cut taxes on grain sales and has opened a commodities exchange along with regional warehouses for grain and beans. The exchange may alleviate shortages by helping farmers and wholesale buyers connect.

The moves, including pay raises for government employees and fuel and food subsidies that will trim revenue by $445 million, will have a ``negative impact'' on development projects, Prime Minister Meles Zenawi told lawmakers March 18.

Health Care Cut

The spending is ``very difficult to bear for a poor country such as ours,'' Zenawi said. Education and health care are among the programs facing cuts.

In Indonesia, escalating prices for rice, soybeans, corn and palm oil may slow economic growth this year from a 2007 pace of 6.3 percent, the highest rate since 1996. Indonesians have rioted over food.

Bolivia, already hurt by $500 million in crop damage from floods, is seeing inflation accelerate because of food prices. While natural gas exports may help soften the blow, much of the money doesn't reach the poor, the Argentine government, speaking for countries in the region, told the International Monetary Fund last month.

Food demand from China and India is driving global prices, along with wider use of crops for fuels. Natural disasters last year reduced cereal harvests.

Surging prices might mean ``seven lost years'' in the fight against hunger, according to World Bank President Robert Zoellick. That would make the UN goal of halving global poverty by 2015 unattainable.

Markets of Abidjan

The crisis is evident even in the markets of Abidjan, the commercial capital of Ivory Coast in West Africa, which is benefiting from the end of a civil war and rising exports of cocoa.

Cow's feet have replaced better cuts of meat and many people eat only once a day, according to Nafissatou Ganame, a 25-year- old mother of three.

``This is probably the main reason why women took to the streets,'' Ganame said, referring to an April 1 demonstration that ended when government troops used tear gas to disperse protesters. ``It wasn't like that before, not in Ivory Coast.''

In Ethiopia, diminished expectations are also taking hold.