Assignment

Eco-102
World Food Crisis
East West University

Submitted to:
Biva Arani Mallik Senior Lecturer Department of Economics East West University

Submitted by:
Nagib Farhad Rijan ID # 2009-1-10-002 Francisca Dessa ID # 2009-1-10-097 Section: 2

World Food Crisis

World Food Crisis And The Actions Taken By Different Countries To Prevent It
An acute food crisis has struck the world in 2008. This is on top of a longer-term crisis of agriculture and food that has already left billions hungry and malnourished. In order to understand the full, dire implications of what is happening today it is necessary to look at the interaction between these short-term and long-term crises. Both crises arise primarily from the for-profit production of food, fiber, and now biofuels, and the rift between food and people that this inevitably generates. More than 6 billion people living in the world today, the United Nations estimates that close to 1 billion suffer from chronic hunger. But this number, which is only a crude estimate, leaves out those suffering from vitamin and nutrient deficiencies and other forms of malnutrition. The total number of food insecure people who are malnourished or lacking critical nutrients is probably closer to 3 billion about half of humanity. The severity of this situation is made clear by the United Nations estimate of over a year ago that approximately 18,000 children die daily as a direct or indirect consequence of malnutrition (Associated Press, February 18, 2007). Lack of production is rarely the reason that people are hungry. This can be seen most clearly in the United States, where despite the production of more food than the population needs, hunger remains a significant problem. According to the U.S. Department of Agriculture, in 2006 over 35 million people lived in food-insecure households, including 13 million children. Due to a lack of food adults living in over 12 million households could not eat balanced meals and in over 7 million families someone

had smaller portions or skipped meals. In close to 5 million families, children did not get enough to eat at some point during the year.

Huge price increases:

Between 2006 and 2008 average world prices for rice rose by 217%, wheat by 136%, corn by 125% and soybeans by 107%.In late April 2008 rice prices hit 24 cents (U.S.) per U.S. pound, more than doubling the price in just seven months.

World population growth:

Growth in food production has been greater than population growth. Food per person increased during the 19612005 period. Although some commentators have argued that this food crisis stems from unprecedented global population growth others point out that world population growth rates have dropped dramatically since the 1980s, and grain availability has continued to outpace population. However, despite production gains made in the last decade, world food demand outpaces any production increases. According to Joachim von Braun, of the

IFPRI, total food production increases only about 1 to 2 percent per year, while total world population increases approximately 4%. Aggregate cereal grain food production, per capita, had risen yearly from the 1960s to the 1980s but has been in decline since. However, this does not take into account any non-food uses of grain production. World population has grown from 1.6 billion in 1900 to an estimated 6.8 billion.

Financial speculation:
Destabilizing influences, including indiscriminate lending and real estate speculation, led to a crisis in January 2008, and eroded investment in food commodities. The United States, specifically, had been facing economic crises which eventually lead to recession. Financial speculation in commodity futures following the collapse of the financial derivatives markets has contributed to the crisis due to a "commodities super-cycle." Financial speculators seeking quick returns have removed trillions of dollars from equities and mortgage bonds, some of which has been invested into food and raw materials. That American commodities speculation could have a worldwide impact on food prices is reflected in the globalization of food production. It represents the concentration of wealth throughout the world which Frances Moore Lapp equates to a weakening in fundamental democracy. In a recent article for The Nation, she suggests that there is no food shortage but that "as long as food is merely a commodity in societies that don't protect people's right to participate in the market, and as long as farming is left vulnerable to consolidated power off the farm, many will go hungry, farmers among them no matter how big the harvests."

The actions taking by different countries :

IFAD is making up to US$200 million available to support poor farmers boost food production in face of the global food crisis. On May 2, 2008 U.S. President George W. Bush said he was asking Congress to approve an extra $770 million funding for international food aid. On October 16, 2008, former US

president Bill Clinton scolded the bipartisan coalition in Congress that killed the idea of making some aid donations in cash rather than in food. The release of Japan's rice reserves onto the market may bring the rice price down significantly. As of May 16, anticipation of the move had already lowered prices by 14% in a single week. On April 30, 2008 Thailand announced the creation of the Organization of Rice Exporting Countries (OREC) with the potential to develop a price-fixing cartel for rice. This is seen by some as an action to capitalise on the crisis. In June 2008 the Food and Agriculture Organization hosted a High-Level Conference on World Food Security, in which $1.2 billion in food aid was committed for the 75 million people in 60 countries hardest hit by rising food prices. In June 2008, a sustained commitment from the G8 was called for by some humanitarian organizations. On October 23, 2008, Associated Press reported the following:
"Former President Clinton told a U.N. gathering Thursday [Oct 16, 2008] that the global food crisis shows "we all blew it, including me," by treating food crops "like color TVs" instead of as a vital commodity for the world's poor.... Clinton criticized decades of policymaking by the World Bank, the International Monetary Fund and others, encouraged by the U.S. that pressured Africans in particular into dropping government subsidies for fertilizer, improved seed and other farm inputs as a requirement to get aid. Africa's food self-sufficiency declined and food imports rose. Now skyrocketing prices in the international grain trade on average more than doubling between 2006 and early 2008 have pushed many in poor countries deeper into poverty. We need the World Bank, the IMF, all the big foundations, and all the governments to admit that, for 30 years, we all blew it, including me when I was President. We were wrong to believe that food was like some other product in international trade, and we all have to go back to a more responsible and sustainable form of agriculture. Former US President Bill Clinton, Speech at United Nations World food crisis.

Brazil started a program in 2003 that is aimed at alleviating the conditions of the poorest people. Approximately one-quarter of Brazils population receive direct payments from the national government under the Bolsa Famlia (Family Fund) antipoverty program. Under this program a family with a per capita daily income below approximately $2 per person per day receives a benefit of up to $53 per month per person (The Economist, February 7, 2008). This infusion of cash is dependent on the familys children attending school and participating in the national vaccination program. This program is certainly having a positive effect on peoples lives and nutrition. It is, however, a system that does not have the same effect as Venezuelas programs, which mobilize people to work together for their own and their communitys benefit.

Some results of world food crisis:

References
http://www.unicef.org/nutrition/index_44186.html http://monthlyreview.org/080501magdoff.php http://www.globalresearch.ca/index.php?context=va&aid=10311 http://news.bbc.co.uk/2/hi/7284196.stm http://www.nydailynews.com/topics/United+Nations+World+Food+Programme http://www.globalresearch.ca/index.php?context=va&aid=10311 http://www.globalissues.org/article/758/global-food-crisis-2008