Food price rises threaten poverty for millions more

Leaders have come up with a package of measures to boost food production, Megan Rowling reports. 

Soaring global food prices have made it harder for Central Americans to provide their families with a decent diet in recent months. The U.N. World Food Programme (WFP) says the rises have been particularly harsh in Central America. The price of maize - the staple food crop - nearly doubled in the year to May. The price of beans has also reached unprecedented levels, partly due to poor weather, and international rice prices have nearly tripled since the beginning of the year.

In rural El Salvador, the same amount of money buys 50 percent less food than 18 months ago, according to the WFP. In principle, that means people’s nutritional intake – already inadequate – has been cut by half. Even small farmers who are able to grow enough to sell on local markets aren’t benefiting from higher prices because of rising fertiliser and transportation costs.

In May, Central American, Caribbean and Andean leaders gathered in Managua for a "Food for Life" summit hosted by Nicaraguan President Daniel Ortega. They issued a declaration promising joint action to reduce the devastating effects of the global food crisis across the region. The $660 million plan aims to stimulate production of grains, meat, dairy products and other basic foods, and to guarantee food supply in the region. It includes credit and technical support for small and medium producers, and the creation of seed production centres and a regional food-distribution network.

According to Reuters news agency, Guatemala - where one in every two children is already malnourished - is giving emergency money to thousands of women in the poorest areas to buy food for their families. Over the next year, 190,000 households in Guatemala's 45 poorest areas will receive between $40 and $80 a month.

El Salvador is distributing hybrid corn seeds to increase production, and Nicaragua is buying crops and selling them cheaply to consumers. The government is also providing 170,000 small farmers with zero-interest loans to buy seeds, pesticides and fertilisers to boost production of beans, corn, rice and sorghum during this year’s rainy season.

A recent U.N. study warned that, if food prices continue to rise by double-digit percentages and wages stay the same, over 30 million more people will be pushed into poverty in Latin America - half of those into extreme poverty. The WFP has set up a commission to monitor the impact of rising food prices on the poorest Central Americans, and plans to support government efforts to help people cope.

Oil-rich Venezuela has called on Latin American energy-producing countries to set up a fund for food aid using windfall oil profits that could give poor nations some relief from soaring prices. Nonetheless, aid agencies are concerned that Central America's emergency measures may not be enough to save millions more from going hungry. 

What’s causing the rise in prices?

The WFP says several factors have combined in a “perfect storm” that has pushed food prices up 54 percent over the last year on international commodity markets. Cereal prices have soared 92 percent. 

The causes include:

•  increased energy costs

• rising demand from economic growth in emerging economies

• growth of biofuels, some of which use food crops like maize

• increasing climatic shocks such as droughts and floods

• decline in food reserves to their lowest level for 25 years

• extreme volatility in commodity markets, which are subject to sudden spikes and speculation

• falling value of the dollar, the currency in which all major commodities are traded

• migration of food-producing peasant farmers to the cities in recent decades

In a bid to protect their populations, many countries have imposed export bans or restrictions on certain food types. The UN argues such measures should be minimised because they can drive prices up further as food becomes less available.