Hunger crisis worsens, food system broken: Oxfam

LONDON Tue May 31, 2011 12:05pm EDT

Fruit and vegetables are seen for sale in Soho's Berwick Street Market in central London May 17, 2011. REUTERS/Paul Hackett

Fruit and vegetables are seen for sale in Soho's Berwick Street Market in central London May 17, 2011.

Credit: Reuters/Paul Hackett

LONDON (Reuters) - Food prices could double in the next 20 years and demand will soar as the world struggles to raise output via a failing system, international charity Oxfam said on Tuesday, warning of worsening global hunger.

"The food system is pretty well bust in the world," Oxfam Chief Executive Barbara Stocking told reporters, announcing the launch of the Grow campaign as 925 million people go hungry every day.

"All the signs are that the number of people going hungry is going up," Stocking said.

Hunger was increasing due to rising food price inflation and oil price hikes fueled by speculators, scrambles for land and water, and creeping climate change, Oxfam said.

Food prices are forecast to increase by something in the range of 70 to 90 percent in real terms by 2030 before taking into account the effects of climate change, which would roughly double price rises again, Oxfam said.

Josef Schmidhuber, deputy director of the statistics division of the U.N. Food and Agriculture Organization (FAO), said he broadly agreed with the message of the Oxfam report but disagreed with Oxfam's long term food price forecast.

"I would not think that food prices would rise rapidly in real terms if there were no real increase in oil prices," Rome-based Schmidhuber said.

"I wouldn't say that our food system is broken. The world will always be able to produce enough food." Wheat prices have been largely flat so far in 2011 although they remain more than 70 percent above levels traded a year ago after rising sharply last summer as the worst drought in decades devastated crops in the Black Sea region.

Prices for corn have more than doubled in the last 12 months with global production unable to keep pace with record demand driven partly by the growth of the U.S. ethanol industry.

The United Nations last month reported food prices were just below record highs after 8 months of rises and in March warned that further oil price spikes and stockpiling by importers keen to head off unrest would hit volatile cereal markets.

Oxfam warned that by 2050 demand for food will rise by 70 percent yet the world's capacity to increase production is declining.

YIELD GROWTH FALLING

The average growth rate in agricultural yields has almost halved since 1990 and is set to decline to a fraction of one percent in the next decade while increasing regional and local crises could double the need for food aid in the next 10 years.

"Now we have entered an age of growing crisis, of shock piled upon shock: vertiginous food price spikes and oil price hikes, devastating weather events, financial meltdowns and global contagion," Oxfam said in a report.

"The world's poorest people, who spend up to 80 percent of their income on food, will be hit hardest."

Entitled "Growing a Better Future: Food Justice in a Resource-Constrained World," the report said: "The scale of the challenge is unprecedented, but so is the prize: a sustainable future in which everyone has enough to eat."

Oxfam believes one way to tame food price inflation is to limit speculation in agricultural commodity futures markets. It also opposed support for using food as a feedstock for biofuels.

"Financial speculation must be regulated, and support dismantled for biofuels that displace food," it said.

Stocking said she favored the introduction by regulators of position limits in agricultural commodities futures trading, noting that financial speculation aggravated price volatility.

French President Nicolas Sarkozy has campaigned for tough measures to limit speculation and is due to use his platform as president of the world's 20 top economies (G20) to push for more regulation this month.

Fighting poverty is the key to relieving hunger, said Martin Mortimer, director of the University of Liverpool's Food Security Network.

"This report from Oxfam re-emphasizes the need to address food security in the context of poverty alleviation," he said. The report said the shortcomings of the food system

flowed from failures of government to regulate and to invest, which meant that companies, interest groups and elites had been able to plunder resources.

(Additional reporting by Nigel Hunt; editing by Keiron Henderson)

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