May 8, 2008 / 12:55 AM / 12 years ago

Venezuela seeks Latin American oil-for-food fund

MANAGUA (Reuters) - Venezuela called on fellow Latin American energy producing countries on Wednesday to set up a fund for food aid using windfall oil profits in an effort to give poor nations some relief from soaring prices.

President Hugo Chavez will invite regional oil and gas producers Brazil, Mexico, Ecuador and Bolivia as well as Cuba to a summit in Caracas to set up the oil-for-food fund, Venezuela’s foreign minister said.

“We will devise a formula based on the price of oil and the level of production that would allow for the creation of a special oil-for-food fund, taking into consideration the means of each country,” said Nicolas Maduro, addressing a meeting of Latin American leaders on the food crisis in Managua.

He did not give further details about the plan. Venezuela has already pledged $100 million with other regional leaders to buy staples such as rice, beans and corn. The countries hope to stave off protests and political unrest now plaguing nations from Cameroon to Bangladesh.

Oil prices have hit record highs at $120 a barrel in recent days, a bonanza for oil-rich countries like Venezuela but devastating for poor Latin Americans suffering from inflation.

The regional leaders gathered in Nicaragua agreed to work to get private banks in the region to direct at least 10 percent of their total lending to farmers.

Presidents and ministers from 11 countries — including Venezuela, Bolivia, Ecuador and Panama — signed the nonbinding agreement.

Small farmers in the region have been hurt by skyrocketing prices for oil-based fertilizers and higher transportation costs.

Prices for basic grains have risen across the globe on a combination of factors like increased food demand in Asia and the use of crops for biofuels.

Reporting by Brian Harris and Ivan Castro, editing by Richard Chang

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