The cereal import bill of the world’s poorest countries is forecast to rise by 56 percent in 2007/2008. This comes after a significant increase of 37 percent in 2006/2007, FAO said today.

For low-income food-deficit countries in Africa, the cereal bill is projected to increase by 74 percent, according to the UN agency’s latest Crop Prospects and Food Situation report. The increase is due to the sharp rise in international cereal prices, freight rates and oil prices.

International cereal prices have continued to rise sharply over the past two months, reflecting steady demand and depleted world reserves, the report said. Prices of rice increased the most following the imposition of new export restrictions by major exporting countries. By the end of March prices of wheat and rice were about double their levels of a year earlier, while those of maize were more than one-third higher, according to the report.

FAO has launched an Initiative on Soaring Food Prices (ISFP), offering technical and policy assistance to poor countries affected by high food prices in order to assist vulnerable farmers to increase local food production. Field activities are starting in Burkina Faso, Mauritania, Mozambique and Senegal. FAO will also help governments prepare actions and strategies to increase agricultural production. In collaboration with the World Food Programme, IFAD and other partners, FAO will enlarge its food market information system to pull together and analyze various data sources at local, national and international levels and to disseminate this information. FAO has allocated US$17 million for these activities.

Domestic food prices spur social unrest

Prices of bread, rice, maize products, milk, oil, soybeans and others basic foods have increased sharply in recent months in a number of developing countries, despite policy measures -- including export restrictions, subsidies, tariff reductions and price controls -- taken by governments of both cereal importing and exporting countries to limit the impact of international prices on domestic food markets.

Food riots have been reported in Egypt, Cameroon, Cote d’Ivoire, Senegal, Burkina Faso, Ethiopia, Indonesia, Madagascar, the Philippines and Haiti in the past month. In Pakistan and Thailand, army troops have been deployed to avoid seizing of food from the fields and from warehouses.

“Food price inflation hits the poor hardest, as the share of food in their total expenditures is much higher than that of wealthier populations,” said Henri Josserand of FAO’s Global Information and Early Warning system. “Food represents about 10-20 percent of consumer spending in industrialized nations, but as much as 60-80 percent in developing countries, many of which are net-food-importers.”

2008 forecast: production up

According to FAO’s first forecast world cereal production in 2008 is to increase by 2.6 percent to a record 2 164 million tonnes. The bulk of the increase is expected in wheat, following significant expansion in plantings in major producing countries.

“Should the expected growth in 2008 production materialize, the current tight global cereal supply situation could ease in the new 2008/09 season,” the report said.

But much will depend on the weather, FAO cautioned, recalling that at this time last year prospects for cereal production in 2007 were far better than the eventual outcome. Unfavourable climatic conditions devastated crops in Australia and reduced harvests in many other countries, particularly in Europe.

“Favourable climatic conditions will be even more critical in the new season because world cereal reserves are depleted,” the report said.

According to FAO’s forecast, world cereal stocks are expected to fall to a 25-year-low of 405 million tonnes in 2007/08, down 21 million tonnes, or 5 percent, from their already reduced level of the previous year.

“Any major shortfalls resulting from unfavourable weather, particularly in exporting countries, would prolong the current tight market situation; contribute to more price rallies and exacerbate the economic hardship already facing many countries,” the report said.

FAO urges all donors and International Financing Institutions to increase their assistance or consider reprogramming part of their ongoing aid in countries negatively affected by high food prices. A tentative estimation of the additional funding required by the governments to implement country projects and programmes for dealing with soaring food prices ranges between US$ 1,2 and 1,7 billion. The release of these funds can provide important support for poor farmers, including access to inputs and assets, to enhance the food supply response in the next agricultural seasons.

Worldwide, 37 countries are currently facing food crises, according to the report. Click here for the complete list of countries in need of external assistance.

Action needed to improve access to inputs to boost local food production in most affected countries

FAO is urging governments and the international community to implement immediate measures in support of poor countries hit hard by dramatic food price increases.

Currently 37 countries worldwide are facing food crises due to conflict and disasters. In addition, food security is being adversely affected by unprecedented price hikes for basic food, driven by historically low food stocks, droughts and floods linked to climate change, high oil prices and growing demand for bio-fuels. High international cereal prices have already sparked food riots in several countries.

In its November issue of Food Outlook, FAO estimated that the total cost of imported foodstuffs for Low Income Food Deficit Countries (LIFDCs) in 2007 would be some 25 percent higher than the previous year, surpassing US$ 107 billion.

“Urgent and new steps are needed to prevent the negative impacts of rising food prices from further escalating and to quickly boost crop production in the most affected countries,” said FAO Director-General Jacques Diouf at a press conference at the Organization’s Rome headquarters.

“Without support for poor farmers and their families in the hardest-hit countries, they will not be able to cope. Assisting poor vulnerable households in rural areas in the short term and enabling them to produce more food would be an efficient tool to protect them against hunger and undernourishment,” Dr Diouf added.

Short-term support

FAO is calling for urgent action to provide small farmers in LIFDCs that depend heavily on food imports, with improved access to inputs like seeds, fertilizer and other inputs to increase, in particular, local crop production.

Within countries, improved access to these inputs could be provided by issuing poor farmers with vouchers to buy seeds, fertilizer and other inputs for major staple crops, which should increase local food production. Such steps could help to alleviate the persistent threat of severe undernourishment of millions of people, FAO said.

FAO will support a catalytic model programme in close cooperation with the private sector. At the same time, FAO aims to assist countries in mobilising resources required to strengthen their productive capability, market access and other measures required for long-term household food security.

Malawi’s success

“Some countries like Malawi have proven that it is possible to boost local food production through the provision of vouchers for farm inputs,” Diouf said.

“The Malawi programme, helped by good rains, has over the last two years produced spectacular results whereby maize production in 2006/07 was one million metric tonnes higher than national maize requirements. The value of the extra production was double that of the investment provided. Many small-scale farmers have benefited and have increased production for their own consumption. The Malawi success could be replicated by other countries facing a very difficult food production environment.”

Short-term intervention will by no means replace medium and long-term investments for enhancing the production capacity in the target countries, FAO said.

“On the contrary, we want the pressure on governments to finance expensive food imports to be eased so they can focus on long-term solutions. Short-term investments have to be accompanied immediately with measures to ensure water control, increase rural infrastructure and improve soil fertility and guarantee long-term sustainability of food production,” Diouf said.

FAO will fund a model programme of interventions from resources put at its disposal by member countries and will encourage national governments, international institutions and other donors to replicate and expand successful interventions in line with ongoing international initiatives.