Food price crisis not over: World Bank
WASHINGTON (Reuters) - The global food price crisis is far from over despite lower commodity prices and more protectionism could worsen the situation for developing nations in the face a severe economic downturn, a top World Bank official said on Thursday.
Speaking at the Reuters Food and Agriculture Summit, World Bank Managing Director Ngozi Okonjo-Iweala said Group of 20 leading developed and developing countries should keep promises they made in November not to impose any new trade-restricting measures for 12 months.
A World Bank report this week said many countries, including 17 of the G20 members, have implemented a total of 47 measures that restrict trade.
While a swathe of countries is at fault, Okonjo-Iweala said advanced economies should set a good example.
"When developing countries see developed countries putting in measures to protect their own agriculture and producers, it is very difficult to then argue that those same developing countries shouldn't do the same," she said.
"The point here about protectionism is what is the example being set by the richer countries?" Okonjo-Iweala said. "We need to trade our way out of the crisis."
Asked why the World Bank does not name and shame countries that impose protectionist measures, Okonjo-Iweala added: "You have to be a bit careful. Countries become very upset when you do that."
Instead, the World Bank would persuade countries through its "analytical power" to drop trade barriers, she said, adding that research has shown that protectionist measures can slow economic growth.
FOOD PRICE CRISIS
Last year, developing countries were gripped by the effects of soaring food and fuel prices, as oil reached a record $147 a barrel in July, prompting some to hoard food or impose price controls and higher prices fueled social unrest.
Okonjo-Iweala said while food prices have fallen this year from last year's peaks, prices of key staple foods, such as corn and rice, were still well above their 2005 level.
In addition, food price volatility is adding to uncertainty and making it difficult for farmers and consumers to plan.
She said the financial crisis had added to the problems as global credit strains have dried up trade financing, hampering countries' ability to trade.
"The financial crisis has just intensified the issue of the food crisis in some ways," Okonjo-Iweala, a former Nigerian finance minister, said.
The World Bank has warned that the combined effects of the food price crisis and the financial crisis will exact a heavy toll on the poor and increase the number of hungry and malnourished in the developing world.
It has estimated there are 923 million people around the world who are malnourished, while weaker economic growth and unemployment are likely to push an additional 53 million people into poverty over the next several years.
This is on top of the 130 million to 155 million people who fell into poverty last year because of soaring food and oil prices.
NO SHORTAGE OF FOOD
Okonjo-Iweala said there was no shortage of food. Instead, prices were higher because more food, such as corn, was being used for ethanol production.
"There is not a global food shortage -- there is a price crisis," she said.
"There are also distribution issues, and it is difficult to get food from surplus countries worldwide to food deficit countries, and in the midst of the food crisis many countries started to take defensive measures and export bans," she added.
She said the World Bank has urged countries hoarding food to release some of it, which has helped ease prices.
"It is much better now than it was eight months to a year ago, but with the financial crisis you're now seeing protectionist measures coming in," she added.
(Additional reporting by Roberta Rampton in Washington, editing by Matthew Lewis)
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