UN steps up donor appeal as food aid costs grow
By Missy Ryan
WASHINGTON, March 24 (Reuters) - Soaring food and fuel prices threaten to widen the funding gap faced by the United Nations food aid agency this year, prompting officials to intensify their plea for last-minute donations they hope will preclude cuts to assistance for needy nations.
The World Food Program, the Rome-based U.N. agency, has been canvassing donor nations in recent weeks to help fill its $500-million shortfall for donations planned for 2008.
But needs have only increased since Josette Sheeran, WFP's executive director, visited Washington late last month as part of the tour aimed at cobbling together the half-billion dollars it requires to feed 73 million people this year.
Since then, Sheeran said in a letter to donor countries on March 20, "food prices have increased another 20 percent and such increases show no sign of abating any time soon." Usually,commodities represent a third of WFP's operational costs.
That puts WFP's funding gap, which is likely to change with market vicissitudes, at $600 million to $700 million.
Price increases have ballooned WFP's 2008 costs from an original calculation of $2.9 billion to at least $3.4 billion today -- and that doesn't include new, unanticipated needs as sky-rocketing food prices squeeze the world's poor.
WFP's quandary sheds light on the underbelly of a historic boom on world commodity markets, which has been a windfall for exporters in the United States and elsewhere.
Prices for wheat, corn, and soybeans have all hit record highs in recent months -- fueled by growing biofuel production and surging demand in countries like China -- but remain vulnerable to shocks overshadowing the wider global economy.
The trend is compounded by record oil prices that make it more expensive to ship or truck aid to hungry people.
This "dramatic market challenge" marks the first time WFP has gone back to donors to ask for extra funds based solely on exploding prices, Sheeran told reporters by phone on Monday.
She said stepped-up donations must come by May to avoid disrupting donations months into the future. It can take five months, for instance, to get aid to Sudan's Darfur region.
"If we don't see starting in May the increased funding ... operations will need to be cut back through the summer and fall. It could be quite a dramatic effect on the amount of food that we're able to reach beneficiaries with," Sheeran said.
There are few signs commodity markets will soon lose momentum. In the past, WFP officials adjusted prices for their cereal basket once a year or even once every two years.
"We are now down to adjusting our basket pricing weekly or even daily, because the changes are so quick and unfortunately, all seem to go in the same direction," Sheeran said.
It is too early to know which donors might step up with extra funding, and with how much.
The Bush administration has already asked Congress for $350 million in extra food aid funding for fiscal 2008 -- which would likely go to both U.S. aid programs and the WFP.
Some in Congress and aid groups now say supplemental funding must be at least $550 million, but the budget-minded administration has been reluctant to expand its request.
WFP is particularly worried about a whole new class of beneficiaries hit by food prices that are rising far more quickly than their wages.
"We now have situations where there will be a lot of food on the shelves, but people can't afford it," Sheeran said.
(Editing by Christian Wiessner)
WASHINGTON, March 24 (Reuters) - Soaring food and fuel prices threaten to widen the funding gap faced by the United Nations food aid agency this year, prompting officials to intensify their plea for last-minute donations they hope will preclude cuts to assistance for needy nations.
The World Food Program, the Rome-based U.N. agency, has been canvassing donor nations in recent weeks to help fill its $500-million shortfall for donations planned for 2008.
But needs have only increased since Josette Sheeran, WFP's executive director, visited Washington late last month as part of the tour aimed at cobbling together the half-billion dollars it requires to feed 73 million people this year.
Since then, Sheeran said in a letter to donor countries on March 20, "food prices have increased another 20 percent and such increases show no sign of abating any time soon." Usually,commodities represent a third of WFP's operational costs.
That puts WFP's funding gap, which is likely to change with market vicissitudes, at $600 million to $700 million.
Price increases have ballooned WFP's 2008 costs from an original calculation of $2.9 billion to at least $3.4 billion today -- and that doesn't include new, unanticipated needs as sky-rocketing food prices squeeze the world's poor.
WFP's quandary sheds light on the underbelly of a historic boom on world commodity markets, which has been a windfall for exporters in the United States and elsewhere.
Prices for wheat, corn, and soybeans have all hit record highs in recent months -- fueled by growing biofuel production and surging demand in countries like China -- but remain vulnerable to shocks overshadowing the wider global economy.
The trend is compounded by record oil prices that make it more expensive to ship or truck aid to hungry people.
This "dramatic market challenge" marks the first time WFP has gone back to donors to ask for extra funds based solely on exploding prices, Sheeran told reporters by phone on Monday.
She said stepped-up donations must come by May to avoid disrupting donations months into the future. It can take five months, for instance, to get aid to Sudan's Darfur region.
"If we don't see starting in May the increased funding ... operations will need to be cut back through the summer and fall. It could be quite a dramatic effect on the amount of food that we're able to reach beneficiaries with," Sheeran said.
There are few signs commodity markets will soon lose momentum. In the past, WFP officials adjusted prices for their cereal basket once a year or even once every two years.
"We are now down to adjusting our basket pricing weekly or even daily, because the changes are so quick and unfortunately, all seem to go in the same direction," Sheeran said.
It is too early to know which donors might step up with extra funding, and with how much.
The Bush administration has already asked Congress for $350 million in extra food aid funding for fiscal 2008 -- which would likely go to both U.S. aid programs and the WFP.
Some in Congress and aid groups now say supplemental funding must be at least $550 million, but the budget-minded administration has been reluctant to expand its request.
WFP is particularly worried about a whole new class of beneficiaries hit by food prices that are rising far more quickly than their wages.
"We now have situations where there will be a lot of food on the shelves, but people can't afford it," Sheeran said.
(Editing by Christian Wiessner)
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