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Surging food prices could slow poverty reduction by 7 years

Business Materials 11 April 2008 00:48 (UTC +04:00)

(dpa) - In order to hammer home the point of just how dire the food situation in poor countries has become, World Bank President Robert Zoellick on Thursday resorted to holding up a bag of rice and a loaf of bread.

"In Bangladesh, a 2 kilogramme bag of rice now consumes almost half of the daily income of a poor family," he told reporters, noting the global price of rice has surged 75 per cent in just the last two months.

Then he turned to Yemen, where the World Bank said in a report Wednesday that a surge in global food prices could reverse all gains made in cutting poverty since 1998.

"Poor people in Yemen are now spending more than a quarter of their incomes just on bread, before they pay for other essential food for their children, let alone basic healthcare or shelter," Zoellick said.

Wheat prices worldwide have jumped 120 per cent in the last year, and 181 per cent in the last 36 months, according to the development bank.

All in all, the World Bank estimated that food prices have gone up 83 per cent in the last three years, and are not projected to fall significantly until 2015.

The food crunch is undermining poverty reduction goals as well as education and mortality rate targets across the developing world.

Zoellick said the price hikes had set back global efforts to reduce poverty by about seven years. The poor are spending as much as 75 per cent of their income on food alone in many countries, he said.

Emergency food aid programmes are in dire need of donations to help subsidise the world's poorest families. Relief agency Oxfam in a statement Thursday said "current food aid levels are the lowest of the past five decades."

Much of the blame has been placed on clean energy concerns. Oil prices are rising about as quickly as food costs - crude oil reached a record of more than 112 dollars per barrel Wednesday - making alternative energy options like biofuels increasingly attractive.

The World Bank said the production of ethanol - an alternative to petrol - in the United States ate up nearly all of the increased maize production globally between 2004 and 2007, when maize prices rose most sharply.

Wheat, soy and palm oil prices have all been hit by increased biofuel production.

Zoellick called on developed countries to immediately fill a 500- million-dollar food aid gap identified by the United Nations World Food Programme, suggesting it was the least they could do given their own thirst for new petrol sources.

"While many are worried about filling their gas tanks, many others around the world are struggling to fill their stomachs," Zoellick said.

In the long-term, Zoellick has called for a "new deal for global food policy," including cutting trade tariffs on agricultural products and measures to boost food grain production.

The first reaction could come on Friday, when finance ministers from the Group of Seven (G7) industrial nations meets in Washington ahead of the International Monetary Fund and World Bank's traditional round of spring meetings over the weekend.

Much of the G7 meeting will revolve around how to deal with an ongoing crisis in financial markets and the wider global economic slowdown.

But British Prime Minister Gordon Brown on Thursday also urged the world's industrialized nations to take immediate action to tackle the food crisis, in a letter to Japanese Prime Minister Yasuo Fukuda, who chairs the G8 group that includes Russia.

"For the first time in decades, the number of people facing hunger is growing," said the letter, as released by the British government.

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