Bonds News

UPDATE 2-G20 asks World Bank to set up agriculture fund

(Adds details at end of G20 summit, background)

PITTSBURGH, Sept 25 (Reuters) - The Group of 20 on Friday asked the World Bank to create a trust fund to increase agricultural investment in poor countries.

In July, countries pledged $20 billion over several years to increase investment in agriculture in poor countries to bolster food security following record high prices last year.

“We call on the World Bank to work with interested donors and organizations to developed a multilateral trust fund to scale up agricultural assistance to low-income countries,” G20 leaders said at the end of their summit here.

The G20 said the fund should be designed so that money will be disbursed quickly and countries can decide for themselves where they want it spent.

Agricultural investment in poor countries has shrunk over the last decade as development agencies focused more on health issues, including malaria and HIV/AIDS.

But record high food prices last year, which prompted unrest in many countries, has focused attention on increasing food production in poor countries.

The G20 did not set a timeline for creating the fund.

Even before last year’s food crisis, one in every three people in Africa suffered from chronic hunger.

While global food prices have declined since mid-2008, they remain much higher than their 2005 levels. For example, in Mali, the prices of millet and sorghum have increased by almost 50 percent since last year. Prices of several staples in Uganda have continued to climb because of higher fuel costs.

The G20 also called for a review of the capital needs of the World Bank and regional development banks by the first half of 2010 to ensure they have enough resources for poor countries.

The body said development banks were on track to deliver the promised $100 billion in additional lending to poor countries, after G20 leaders in April called on them to increase loans and grant handouts to protect the poor from the global economic slump.

The poverty-fighting institutions have significantly ramped up their lending to poor countries since last year to help them weather the global economic downturn. The heads of the banks have said they will require new capital from rich nations if demand for their loans continues at the current pace. (Reporting by Lesley Wroughton, Editing by Frances Kerry and Leslie Adler)