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DEVELOPMENT: Is a Food Bank Answer to the Crisis?

Thalif Deen

UNITED NATIONS, Oct 7 2008 (IPS) - Bangladesh, one of the world's 49 least developed countries (LDCs) described as the poorest of the poor, is calling for the creation of a global food bank.

"We have suggested that a Food Bank could allow countries facing a short-term shortfall in production to borrow food grains on preferential terms," says Bangladeshi Prime Minister Fakhruddin Ahmed, who was in New York last week to address the General Assembly.

Once they overcome the shortfall, these countries could return the quantum to the Food Bank, he added.

At a summit meeting of the South Asian Association for Regional Cooperation (SAARC) last August, the leaders of Afghanistan, Bangladesh, Bhutan, India, the Maldives, Nepal, Pakistan and Sri Lanka reiterated their own proposal for a regional food bank.

"We direct that the SAARC Food Bank be urgently operationalised," said the declaration adopted at the conclusion of the meeting in the Sri Lankan capital of Colombo.

The summit also directed that an "extraordinary meeting" of SAARC agriculture ministers be convened in New Delhi in November to discuss the "emerging global situation of reduced food availability and worldwide rise in food prices."

The proposal for a food bank comes at a time when most food-deficit developing nations are worried that the spreading economic crisis will impact on them – sooner or later – making the situation worse.

In an interview with IPS, Hamid Rashid, director-general of Multilateral Economic Affairs in Dhaka, spelled out details of the proposal which Bangladesh is pushing at the highest levels at the United Nations.

"We envisage that the Global Food Bank will have two operational 'windows' to stabilise world food prices," Rashid said.

The first window, based on Special Drawing Rights (SDRs), will allow countries to borrow food grains in times of crisis and shortfalls, according to a pre-determined quota.

The quota for each country, Rashid said, will be determined on the basis of a formula, taking into account the size of its vulnerable population, variability in its food production, its dependence on food imports and other related factors.

Borrowing countries will repay in the form of food grains. The food stock will remain dispersed all over the world, perhaps closer to high-risk locations, and will cross borders only when SDR would be exercised, he added.

The second window of the Global Food Bank – the market window – will create a trading platform for futures and options on food grains.

"Governments will be able to buy and sell futures and options, to and from private parties, to smooth and stabilise the prices of food grains over medium to long-run," Rashid said.

He added that whether his prime minister's proposal will materialise or not will depend on a number of factors, including strong political leadership, the willingness of large food exporters to participate in such a mechanism and the lessons learnt from the current crisis.

Matthew Wyatt, assistant president in the external affairs department of the Rome-based International Fund for Agricultural Development (IFAD), said the global food price crisis has focused attention on the need to ensure that countries that need to do so can source sufficient food to feed their people.

Several ideas have been floated, involving physical or virtual grain reserves, creation of regional or global funds for agricultural development and food, establishment of private investment funds for agricultural and enterprise development or a combination of all of these, he said.

"IFAD welcomes the suggestion of the Bangladeshi prime minister as an important contribution to this debate," Wyatt told IPS.

However, there is also a need to consider other instruments to address access to food by poor rural people, including safety nets, cash transfers, investments in increased smallholder agricultural productivity and creation of sustainable non-agricultural economic activities to increase the poor's capacity to demand food via the market, he added.

During the two-week high-level segment of the General Assembly, which concluded last Friday, speaker after speaker underlined the need for both short- and long-term solutions to the food crisis that refuses to subside.

Indonesia, which claimed it had no food riots because of a rice surplus, called for a "new green revolution".

Malawi pleaded for subsidies for agriculture and food production in sub-Saharan Africa.

And Sierra Leone said that "massive investment in agriculture is the key to a long-term solution to the continent's food crisis." The country's president, Dr. Ernest Bai Koroma, told delegates last week he welcomes the work of the Alliance for a Green Revolution in Africa (AGRA), chaired by former U.N. Secretary-General Kofi Annan.

"The Alliance recognises that massive investments in agriculture are the key to a long-term solution to the continent's food crisis," Koroma said.

Asked about a new green revolution, Wyatt of IFAD told IPS: "Despite many successes and innovations in technology, institutions and practices in recent decades, the Green Revolution breakthrough that jump started Asia's agricultural growth in the 1960s and 1970s has not been mirrored in the African continent."

A uniquely African and "doubly green" agricultural revolution is needed to respond to challenges that are profoundly different from those confronted by Asia 40 years ago and to Africa's diversity of agro-ecological contexts and livelihoods, he said.

First of all, the nature of agriculture in Africa is different; it is more diversified and resources and climatic conditions are more varied.

African agriculture, he pointed out, is dominated by small-scale farmers and their skills, energy, innovations and experience must be harnessed.

In many areas, progress is undermined by poor infrastructure, policy discrimination against agriculture, low investment, armed conflicts and chronic health problems such as TB, Malaria and HIV/AIDS.

Increasingly, higher food, energy and input prices are having significant effects on household food security and purchasing power, especially for net buyers of food.

Wyatt said increasing local, national and regional production and trade are therefore critical priorities in the face of market volatility.

"The challenges of creating an African Green Revolution have mounted as a result of soaring food and fuel prices and the effects of climate change. To make it a reality, agriculture must be a priority for donors and African governments alike at the level of policy and practice."

One priority from IFAD's perspective is to insist on greater investment in agricultural research, adaptation of technology and strengthening demand-led extension services – especially for smallholders and women.

An African Green Revolution will also need access to inputs, including fertiliser, and strong private sector involvement. Rapidly increasing food prices are a key challenge given that food accounts for 60-80 percent of a poor person's daily expenses.

Indeed, higher food prices are expected to push some 30 million people into deeper poverty in sub-Saharan Africa.

"At the same time, they represent an opportunity to encourage private investors to invest in the sector and benefit from the momentum that is being generated in Private Public Partnerships."

This will need the strengthening of rural organisations, in particular farmers' organisations, which are key partners for IFAD at local and national level, he declared.