G-8 Summit: Food prices to stay high at least until 2012

Only investments in raising farm yields can bring relief, says World Bank chief
Anthony Rowley, Business Times 8 Jul 08;

HIGH food prices that are triggering social unrest in many parts of the world and which are a major cause of soaring inflation are likely to continue at least through 2012, World Bank president Robert Zoellick said yesterday, rejecting forecasts that good harvests this year could cause prices to fall significantly.

Only massive new public and private investment in raising agricultural yields can bring relief, he said on the opening day of the G-8 summit in Toyako.

United Nations secretary-general Ban Ki-moon meanwhile warned that 'high food prices are turning back the clock on development gains'. He urged G-8 leaders to come up with solutions during the remaining two days of the three-day summit.

Both men called for an end to trade-distorting subsidies and export restrictions on basic foodstuffs.

They also voiced strong concerns over record high energy prices. Oil prices are expected to loom large when leaders of the G-8 nations discuss the global economy today, and there may be calls for a stronger US dollar to stem the surge in oil and other commodity prices.

But Mr Zoellick warned that this could be achieved only by higher US interest rates, with adverse global economic consequences.

Food and energy prices also dominated much of the 'outreach' debate which the G-8 leaders held yesterday with leaders of seven African nations that were invited to the summit meeting for the first time this year. Mr Ban urged the G-8 to take concrete action to implement their commitments made in 2005 to double their aid to Africa by 2010.

The food crisis has taken the G-8 leaders by surprise and has to some extent overshadowed debate on climate change, although the two are interconnected because of the impact that global warming and erratic weather patterns are having on agricultural output.

It is a First World crisis as much as a Third World crisis, as British Prime Minister Gordon Brown noted yesterday here when he called upon Britons to stop 'wasting' food.

There is little prospect of one or two good grain harvests solving the problem, because of its deep-seated nature, Mr Zoellick suggested. Nor will high food prices automatically stimulate higher agricultural output in developing regions where farmers lack access to seeds and where soaring energy prices have pushed fertiliser prices beyond their reach.

Only a combination of short-term emergency food aid and long-term investment in higher agricultural productivity can restore balance to food supplies and prices and in the meantime the UN should vote to outlaw export restrictions that are adding to the global crisis, he added.

Mr Ban also called for more research into the impact of bio-fuel production on food prices.

Climate change will be a key issue today and tomorrow when the G-8 leaders hold outreach meetings with the leaders of China, India, Brazil and other major carbon-emitting emerging nations.

It is still unclear whether the G-8 leaders will commit themselves to halving their countries' CO2 emissions by 2050, and to interim emission-cutting goals.

Climate change is 'no longer something in the future', Mr Ban declared at a briefing.

He called on the G-8 to 'send a signal' from the summit by committing themselves to long and medium-term reduction targets. 'We cannot leave everything to Copenhagen,' he said in a reference to the meeting to be held next year to agree on a successor regime to the Kyoto Protocol which is due to expire in 2012.

Leaders from China, India, Brazil, Australia and other big carbon polluters will meet G-8 members during a separate gathering of what is known as the Major Economies Meeting.

'Let's agree a clear cut 50 per cent reduction by 2050 and on the principle of a mid-term target,' European Commission president Jose Manuel Barroso said yesterday.

'If we agree among ourselves then we are in a much better position for discussions with our Chinese partners and others.'