18 May 2008

Africa: Will Continent Manage to Feed Its People Amid Rising Costs

Abuja — The rising cost of staple grains across Africa has already caused food riots in a few countries. In Mogadishu, Somalia, thousands protested when food sellers rejected old currency notes amid spiralling inflation.

In Burkina Faso, riots broke out in February, and workers' unions downed their tools in April over high costs of food and fuel. About 10 people died in Mozambique in February while protesting against rising costs of living, and in Senegal, many people, waving empty rice sacks, took over the streets of Dakar on April 26 to protest against food prices.

The ill wind blew in Cameroon in February. According to the government, 24 protesters were killed ( human rights sources say over 100), forcing the government to raise salaries and suspend customs duty on basic foodstuffs.

Members of South Africa's labour federation stomped through Johannesburg in April demonstrating against increased food and electricity prices. The disturbance reached Ivory Coast in March. More riots are likely to follow.

Even though this problem is global and not African, as food protests have equally rocked Haiti (and brought down a prime minister there in April), Argentina, Peru (protesting women banged empty pots and pans outside Peru's Congress late April, while farmers blocked rail and road links in February), Bangladesh, Vietnam, Afghanistan, and even Russia, it is heartening that the AU will meet end of May to adopt a common strategy to combat the menace.

Needy countries

The African Development Bank has already earmarked $1 billion for interventionist loans to needy countries. This is in addition to its $3. 8 billion approved earlier meant for agriculture.

The World Bank is also setting aside millions of dollars to check the rising cost of staple foods in the continent, while the UN is calling for a New Deal for Africa and its agriculture, and as usual called on donor nations and aid agencies to meet the challenge of impending starvation of millions in the continent and Asia.

Yet, the situation is grim; a decade ago, the world's reserve stocks of grain had enough food to last six months. Today the stock can last for only 40 days, said Prof Don Smith, chairman of the Department of Plant Sciences at McGill University, in USA. "That's perilously trim," he added.

The global food shortage has raised the price of food by 83 per cent since 2005 and is expected to last for over a decade as it was caused by several factors.

The causes include increased wealth in places like China and India, fuelling increased demand for meat (necessitating increased production of crops as it takes 10 kilos of plant material to produce one kilo of beef, according to Smith).

Also, global human population has been exploding recently, growing more since 1950 than it did in the past 400 million years - from one billion in the 1900s to the present 6.6 billion.

Meanwhile, Canada, the U.S. and the European Union have for long granted agricultural subsidies that undercut African farmers. They export their agricultural surplus to Africa and sell it below production price, forcing African farmers out of contention.

Severe weather has also contributed to the food crisis. Drought in West and East Africa as well as flooding across much of the continent last year drastically reduced last year's crop yields, thus making African countries particularly vulnerable this year as there was little surplus yield to be stored for use this year.

Other parts of the world also faced natural disasters. Droughts in Australia halved its wheat production last year and poor crops in the E.U. and Ukraine in 2006 and 2007, though largely offset by good crops and increased exports in other countries, still weakened the food supply.

Though increased production prices (around 15 per cent), due directly to higher energy and fertilizer costs, are minimal, further crisis is ahead as global warming effects have been calculated to reduce maize production by 30 per cent in Southern Africa, and a 15 per cent drop in global wheat yields by 2030.

The trend will continue as the weather pattern worsens.

Weather patterns

Despite weather problems, Mr Achim Steiner, head of the UN's Environmental Programme, has said there's enough food to feed everyone on the planet and blamed market speculation for distorting availability, resulting in the stockpile of supplies and driving up prices.

There may be enough food all right, but not all is now used just for food; a huge amount of food (wheat, soy, maize and palm oil) is now dedicated for bio-fuels as concerns over oil price increase.

Several countries have already set standards or targets for use of bio-fuels. For instance, the European Union has set a 5.75 per cent target of motor fuel use from bio-fuels by 2010.

For the U.S, 28.4 billion litres of bio-fuel is mandatory for transportation by 2012, while Brazil will require that all diesel oil must contain two percent bio-diesel by 2008 and five per cent by 2013.

If the above bio-fuel requirement is checked against the recent world experience, then Africa is in big trouble as the steep food price will persist.

As usual, poor people, especially the urban poor, will suffer. A research in eight developing countries showed that higher food prices increase the poverty rate. The direct result of this is that as the food price increased from 2005 to 2007 it has raised the poverty rate by as high as three per cent in some countries.

This should be worrisome as almost all African countries were unable, even in good times, to meet their millennium development goals target. Therefore, poverty will surely erode the little developmental gains they have so far registered. So far, few countries have launched major agricultural initiatives against the grain scarcity.

Kenya is a notable difference; its Agriculture Ministry in partnership with Alliance for Green Revolution in Africa, Equity Bank Ltd, the International Fund for Agricultural Development have signed an agreement for a loan facility of US$50 million to bring affordable financing to 2.5 million farmers, agricultural value chain members such as rural input shops, fertilizers and seed wholesalers and importers, grain and food processor traders.

Kenya's Agriculture Ministry will contribute millions of dollars further to subsidise poor and needy farmers through vouchers redeemable only at agro-dealer shops in exchange for farm implements. Kenya deserves to do even more as it is in an unusual predicament as its recent post-election crisis has displaced many farmers who are yet to be resettled.

Some other African countries have, however, introduced interventions that can only be beneficial as targeted safety nets' short-term measures to support the purchasing power of the poor without distorting domestic incentives to produce more food, and without reducing the incomes of poor food sellers. Examples include the cash transfer programmes place now in Ethiopia, Egypt, Mozambique, South Africa, and Tunisia.

Several of these countries are adjusting on-going programmes in response to the food scarcity. For example, in Ethiopia, where food price inflation in February 2008 was 23 per cent, the government has raised the cash wage rate of the largest cash-for-work programme by 33 per cent.

Angola uses emergency food aid distribution to ensure food security for vulnerable groups. Egypt has also increased workers' wages by 30 per cent. Still other countries, including Burkina Faso and Mozambique, make effective use of school feeding programmes to improve the food intake of school-age children and their families.

South Africa is expanding allocations to its school nutrition programme to keep pace with the rate of food inflation. Yet, these come with additional demands on the treasury; in the case of Ethiopia, the additional costs of combined measures to raise the wage on the cash-for-work programme, lift the value-added tax on food grains, and distribute wheat to the urban poor at a subsidised price, are likely to exceed one per cent of GDP.

In Cameroon, the government slashed customs duties on certain imports, like cement, and reduced or dropped taxes on certain goods, like rice, fish, cooking oil and flour. But some traders have, however stuck to old prices, including those that had increased between 50 and 100 per cent within the year.

Emergency aid

To enforce the new price regime, the government has deployed price control teams, including gendarmes.

The Paul Biya administration also promised to create 14,00 new government jobs, cut electricity rates and review fuel prices, telephone fees, and even bank charges, as well as effecting a 15 per cent salary increase and a bigger housing allowance for civil service and military personnel.

Official figures put Cameroon's inflation rate at two per cent, but purchasing power for an estimated 18.3 million Cameroonians had dropped considerably over time.

The jump in world food price just set off the protests that have for years been waiting to happen; the worst in 15 years. The palliatives appear hardly adequate, Cameroon had in 1993 (as part of IMF-backed reforms), reduced state workers wages by 70 per cent.

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