04 April 2008
Banker Calls for New Global Food Policy, More Investment in Africa
World Bank’s Zoellick pledges to nearly double loans for farming in Africa
Washington -- A “New Deal” for global food policy is urgently needed -- and sovereign wealth funds should invest $30 billion in Africa to help fuel the continent’s long-term economic growth and development -- says World Bank Group President Robert B. Zoellick.
In an April 2 speech before the Center for Global Development in Washington, Zoellick warned that such a new food policy is needed because as financial markets have tumbled, food prices have soared. The New Deal is a term coined by President Franklin D. Roosevelt during the 1930s to describe programs to alleviate poverty and boost a weak economy in the United States.
“Since 2005, the prices of staples have jumped 80 percent. Last month, the real price of rice hit a 19-year high; the real price of wheat rose to a 28-year high and to almost twice the average price of the last 25 years.
“The good news for some farmers adds a crushing load to the most vulnerable -- children, as young as 4 or 5, [who are] forced to flee the safety of their rural communities to fight for food in teeming cities,” he said. Food riots threaten societal breakdown, and mothers are deprived of nutrition for healthy babies, he added.
Citing World Bank statistics, Zoellick estimated that 33 countries around the world face potential social unrest because of the acute hike in food and energy prices. “For these countries, where [the amount of money available for] food comprises from half to three-quarters of consumption, there is no margin for survival,” he warned.
“The realities of demography, changing diets, energy prices and biofuels, and climate changes suggest that high -- and volatile -- food prices will be with us for years to come,” he said.
The New Deal for global food policy would meet that challenge. “This New Deal should focus not only on hunger and malnutrition, access to food and its supply, but also the interconnections with energy, yields, climate change, investment, the marginalization of women and others, and economic resiliency and growth. Food policy needs to gain the attention of the highest political levels, because no one country or group can meet these interconnected challenges,” Zoellick said.
The immediate needs of many countries must be met, he said, while noting that the United Nations World Food Programme is now in need of at least $500 million in additional food supplies to meet emergency calls.
The United States is committed to the goal of global food security through its international food assistance and other foreign assistance programs. In fiscal year 2007, the United States provided more than $2.1 billion in food aid to 78 developing countries, reaching tens of millions of people worldwide.
A New Deal for global food policy, Zoellick told his audience, will require a stronger delivery system to overcome fragmentation in food security, health, agriculture, water, sanitation and rural infrastructure and inequitable policies based on gender.
A shift from traditional food aid to a broader concept of food and nutrition assistance must also be part of this New Deal, he said. “In many cases, cash or vouchers, as opposed to commodity support, is appropriate and can enable the assistance to build local food markets and farm production. When commodities are needed, purchasing from local farmers can strengthen communities. Funds can buy micronutrients customized to locations.”
President Bush has been pushing U.S. lawmakers to allow the U.S. government to spend food aid money to buy crops in poor countries.
The World Bank Group can help, Zoellick said, by backing emergency measures that support the poor while encouraging incentives to produce and market food as part of sustainable development. He cited the World Bank’s World Development Report 2008, on agriculture for development, for pointing the way forward. “We can help create a ‘Green Revolution’ for sub-Saharan Africa by assisting countries to boost productivity throughout the agricultural value chain and help smallholder farmers to break the cycle of poverty.”
Additionally, he said, the World Bank plans to “almost double” its own lending for agriculture in Africa, from $450 million to $800 million, and can help countries and farmers manage systemic risks, including using financial innovations to counter weather variability, such as drought. “We can offer access to technology and science to boost yields” as well, he added.
A New Deal for global food policy will contribute to inclusive and sustainable development, he stressed. “Poor, middle-income, and developed countries will benefit together. Income gains from agriculture have three times the power in overcoming poverty than increases in other sectors, and 75 percent of the world’s poor are rural, with most involved in farming. Almost all rural women active in the economies of developing countries are engaged in agriculture. With support, women can seize the opportunities of globalized food demand.”
Zoellick also called for a “1 percent solution” for sovereign wealth funds that could greatly fuel equity investment and development in Africa. “The rising economies of China, India, Brazil and others have strengthened and rebalanced the international economy, providing new poles of growth -- making them the new ‘stakeholders’ in globalization,” he said.
He reminded his audience that sovereign wealth funds currently hold an estimated $3 trillion in assets. A sovereign wealth fund is an investment fund created or controlled by a government, usually of a country with trade surpluses and abundant foreign monetary reserves. “If the World Bank Group can create the equity investment platforms and benchmarks to attract these investors, the allocation of even 1 percent of their assets would draw $30 billion to African growth, development and opportunity.
“This 1 percent could be the start of something much bigger, across more types of funds and countries, because the investment of wealth into equity for development offers opportunity, not something to fear,” he said.
An international food aid conference -- co-sponsored by the U.S. Agency for International Development and the U.S. Department of Agriculture -- will take place April 14-16 in Kansas City, Missouri, to discuss many of these issues.
