AfDB forms fertilizer fund to help fight food crisis

By Gordon Bell

MAPUTO (Reuters) - The African Development Bank agreed on Thursday to set up a facility to subsidize farmers battling high fertilizer costs and help them boost production as food prices surge.

The move was the latest in efforts to help Africans cope with sharply rising food prices that threaten to ignite inflation and damage economic growth.

Food costs have sparked riots and protests in many African countries, with the poor, who spend the bulk of their income on food, the hardest hit. Almost half of Africa's 900 million people live in poverty.

"I have to be categorical, some degree of fertilizer subsidy will have to take place," AfDB President Donald Kaberuka told reporters at the end of the group's annual meeting in Maputo.

"These will have to be market-smart subsidies. They will have to be targeted. This may require public finance (and) this may require support from international institutions."

The bank hoped to raise about $500 million in funding for the facility within six months.

fertilizer prices had jumped to $1,100 a tonne in April from $245 a tonne in January, he said.

The fund was part of a series of measures announced in response to spiraling costs.