Farm aid and fair trade key to food crisis: U.N.

A worker empties imported rice sacks for repackaging inside a government warehouse in Manila April 14, 2008.

ACCRA (Reuters) - Increased aid for agriculture and the abolition of rich-nation subsidies are key to finding a long-term solution to rising world food prices, the head of the U.N. Conference on Trade and Development said on Saturday.

A doubling of the price of major cereals on international markets since mid-2007 has sharply increased the risk of hunger and poverty in developing countries, and has already sparked food riots in parts of Asia and Africa.

UNCTAD boss Supachai Panitchpakdi said a disproportionate amount of aid had been spent on governance initiatives in the developing world in recent decades while agriculture had been neglected, leaving some poor countries which were once net food exporters reliant on expensive imports.

"We will be jumping from one crisis to another unless the international community can address the major issue of a restructuring of the allocation of international aid," he told a news conference on the eve of an UNCTAD summit in Ghana.

Panitchpakdi said that between 2003 and 2005, $1.3 billion of development aid was spent on governance initiatives in the world's poorest countries, compared with just $12 million on agricultural development, which he described as "more than disproportionate".

This decade will be the first in recorded history in which more people in the economically active population of the least developed nations will seek work outside the agricultural sector than within it, exacerbating the problem, he said.

"People are moving out of agriculture into urban areas, most of them cannot find work. We have less support coming out of the agricultural population and more mouths to be fed," he said.

"The productivity gap has been increasing and at the moment there is no end in sight."

GLOBAL TRADE, FUTURES MARKETS

While urgent action was needed to provide food aid to pockets of the world where there were shortages, a longer-term solution needed to take into account that there are also areas of food surplus around the globe, Panitchpakdi said.

The former World Trade Organisation (WTO) chief said finding agreement at the delicately poised WTO agriculture negotiations and eliminating rich-nation subsidies was a vital part of addressing those inconsistencies.

"We need to be able to move towards, as early as possible, a conclusion of the Doha development agenda, particularly in the area of agriculture," he said.

WTO Director-General Pascal Lamy has said the WTO could tackle the systematic distortions to the international market for food arising from tariffs and subsidies, but could do nothing to fix the immediate crisis.

"Much has been said that the elimination of distortions might result in some increases in food prices," Panitchpakdi said.

"But the net effect will be that the elimination of the subsidies and agricultural distortions would afford for the first time the opportunities for farmers in poor countries to be able to look forward to getting realistic prices so that they can go on with the expansion of their production."

Panitchpakdi said speculators on commodities futures markets were worsening the problem of high food prices, and he hoped the April 20-25 UNCTAD meeting in Ghana would address this.

"I hope that one of our sessions ... would handle this issue, how to look into the activities of commodities futures in a way that the futures market would help solve the food issue, not aggravate it," he said.

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(Writing by Nick Tattersall; editing by Tim Pearce)