Development ministers urge action on food prices

|PIC1|Top finance and development officials from around the globe on Sunday called for urgent action to stem rising food prices, warning that social unrest will spread unless the cost of basic staples is contained.

"We have to put our money where our mouth is now, so that we can put food into hungry mouths. It is as stark as that," World Bank President Robert Zoellick said at the end of a meeting of the IMF and World Bank's Development Committee.

Zoellick and British Prime Minister Gordon Brown have said the issue of skyrocketing food prices needs to be front and centre at the highest political levels.

While Brown said he would raise it at an upcoming meeting of the Group of Eight powerful nations, Zoellick said that would be too late. "Frankly speaking, that G8 meeting is in June and we cannot wait," he told a news conference.

Concerns about food costs took on new urgency as senators in Haiti ousted the prime minister after a week of food-related rioting in which at least five people died. There have also been protests in Cameroon, Niger and Burkina Faso in Africa, and in Indonesia and the Philippines.

In just two months, rice prices have shot up around 75 percent, closing in on historic highs. Meanwhile, the cost of wheat has climbed by 120 percent over the past year, more than doubling the price of bread in most poor countries.

The problem is most worrying in developing countries where food represents a larger share of what consumers buy. It threatens to sharply increase malnutrition and hunger, while reversing progress in reducing poverty and debt burdens among the poorest nations.

GLOBAL CONTAGION

Indian Finance Minister Palaniappan Chidambaram said rising food costs threatened to stir more social unrest.

"It is becoming starker by the day that unless we act fast for a global consensus on the price spiral, the social unrest induced by food prices in several countries will conflagrate into a global contagion, leaving no country - developed or otherwise -unscathed," he said.

"The global community must collectively deliberate on immediate steps to reverse the unconscionable increases in the price of food, which threatens to negate the benefits to the poor nations from aid, trade and debt relief," he said.

Douglas Alexander, Britain's minister for international development, said his country is willing to work with others to bring prices down. "Now is the time for urgent action to tackle the crisis, which is affecting millions of the poorest people across the globe," he said.

U.S. Treasury Secretary Henry Paulson warned that governments should resist the temptation to fight soaring food costs with price controls, which he said would likely backfire.

The World Bank has warned that food prices will remain elevated this year and next, and likely stay above 2004 levels through 2015.

BIOFUELS SQUEEZE

One of the main factors behind the surge in prices is the increased use of crops for biofuels as an alternative energy source. Almost all of the rise in global corn production from 2004 to 2007 went to biofuels in the United States.

Other factors that have contributed to the rise are the growth in demand in Asia and droughts in food-producing nations like Australia.

Climate change also received heightened attention at Sunday's meeting - one of the few times that finance and development ministers have been drawn into the discussions.

The ministers called on the World Bank to mobilize financing to help the poor deal with the effects of global warming.

In Bali in December, countries agreed on a road map for two years of talks aimed at securing a treaty to succeed the Kyoto Protocol on climate change when it expires in 2012.

Zoellick on Sunday helped convene a meeting he called a "Bali Breakfast" that brought developing countries together to discuss ways to tackle climate change. He said he hoped it would become a regular event.

"The drive to address climate change won't work if it's seen as a rich man's club," Zoellick said.