Food costs threaten gains against poverty

from the Chicago Tribune

By Laurie Goering

NEW DELHI — Gita Devi grew up poor but in recent years has begun feeling something akin to rich.

The 35-year-old house cleaner and her construction worker husband earn a total of $205 a month, an income that has pushed them and their children just above the cutoff point for extreme poverty, set by the World Bank at $1 per person per day.

"Whatever we earn gets spent," she said. But the family brings in enough to keep all three children in school, to afford three basic meals a day and to buy Devi the occasional new sari, even if it does have to last a year. Compared with the past, "I'm earning more," she said. "I'm stronger and I have more."

Yet record food and oil prices threaten to push Devi and 100 million people like her worldwide back into abject poverty, development experts estimate.

Surging inflation is striking hardest at the world's very poor, who are forced to spend 60 percent to 80 percent of their income on food, experts say.

If long-term prices stay high—as food analysts predict—the financial burden could drive families back below the poverty line and undermine progress toward the goal of halving the world's poverty and hunger by 2015, a target established at the UN Millennium Summit in New York in 2000.

Leaders of more than 40 nations will grapple with this and other problems when they gather Tuesday for another United Nations summit in Rome, this one on the growing global food crisis. The aim of the three-day summit is to seek common strategies on agriculture, trade, subsidies and biofuels to offset the highest food prices in 30 years.

Higher food and oil costs are "definitely a problem for the [UN] Millennium Development Goals," said Alex Evans, a London-based expert in food prices and development and a fellow at the Center on International Cooperation at New York University.

National and international aid programs could help close some of the gap, Evans said. But he cautioned that persistent price increases will lead to inequality and political unrest in developing countries. "If this is a long-term structural shift, the new normal, there are quite big questions about the sustainability of that over the long run."

Just as troubling, surging food and oil prices threaten to make hunger and extreme poverty not only a lingering problem in Africa but a resurgent one in Asian countries, including Bangladesh and Vietnam, that had been on track to reduce extreme poverty, said Selim Jahan, a poverty policy expert with the United Nations Development Program.

Efforts to cut abject poverty have proved extraordinarily difficult in many parts of the world. By some estimates, the number of people living on $1 a day or less has fallen from around 1.3 billion in 1998 to about 1 billion today, according to the 2007 UN Human Development Report.

'Very strange inequities'
Progress has been slow, particularly in the places with the largest numbers of very poor. Between 1981 and 2001, the percentage of sub-Saharan Africans living in extreme poverty nearly doubled, to 316 million, largely due to economic stagnation and emerging problems such as the AIDS epidemic. Extreme poverty has since declined only slightly in Africa, Jahan said.

India, despite its growing reputation for economic success, still has the largest number of people living in abject poverty: more than 350 million, about a third of the population.

As a few million Indians ride the wave of the nation's economic emergence, hundreds of millions of others find themselves left behind, a fact that has bred frustration and fueled insurgent movements around the country.

"Growing economic prosperity is creating very strange inequities," said A.K. Shiv Kumar, a development economist in New Delhi.

India has tried to close the gap by providing benefits aimed primarily at the poor, including free midday meals in public schools.

India's current government, well aware that inflation in food prices helped doom its predecessor, has also deployed a range of subsidies to try to keep basic food and fuel prices low.

But economists say many such measures end up benefiting wealthier Indians as well and may not be sustainable in the long run.

Subsidies "help the middle class with consumption and force you to spend more money than you have, causing inflation," Evans warned. Instead, what countries should aim for are social safety nets narrowly targeted at the very poorest, he and Jahan said.

That is a challenge in India, where government distribution programs are tainted by corruption and much government help is siphoned off before it reaches the poor—and where it sometimes seems nearly everyone is clamoring to be classified as extremely disadvantaged.

'We are going nowhere'
In Africa, more nations are for the first time putting in place government-funded welfare programs, primarily to help support children orphaned by AIDS, Kumar said. Such investment, if combined with boosted government spending on basic education, health care, nutrition and sanitation, could mitigate the effects of higher food and oil prices on the very poor, he said.

Other keys to easing price pressure on the poorest will be investing in research to boost agricultural productivity, ensuring emergency international food aid programs are adequately funded, and finding ways to target international assistance not at countries with the lowest income average—the traditional target—but at specific pockets and regions of extreme poverty regardless of what nation they lie in, development experts said.

"The focus should be on poor people rather than poor countries," Evans said. "The whole approach needs an update."