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Page last updated at 16:43 GMT, Monday, 2 June 2008 17:43 UK

UN faces food crisis challenge

By David Loyn
International development correspondent, BBC News

Marlon Dizon eats cheap government subsidised rice for lunch with his relatives in a poor community in Manila, Philippines, in May 2008.
The UN does not believe the crisis has been caused high demand alone

Food prices have been rising significantly for two years now, but it took the huge spike in prices that peaked in February this year to engage the world's attention, as a realisation of the scale of the crisis emerged in many countries.

The food price index of the UN's Food and Agriculture Organisation (FAO) rose by a steep but manageable 8% in 2006, but then much more sharply - by 24% - in 2007, and 53% in the first three months of this year alone - an unprecedented rise.

The summit beginning in Rome on 3 June will try to find a way out, and since the crisis has many causes, the solution, too, is expected to be complex.

The main document they will consider is a hard-headed look at the problems, challenging some preconceptions that have emerged in recent months.

For example, the paper downplays the role of increased demand from Asia in worsening the whole crisis, pointing out that China is a net exporter of cereals, and India, the other large and fast-growing economy in the region, has been a net importer in only one year since 2000.

In this three-dimensional chess game of cause and effect that has run round different crops to cause the crisis, there are some opportunities

But on the other hand, both are responsible for pushing up the price of proteins, particularly because of increased demand for meat from China, and demand for oilseeds (like soybeans) and vegetable oils from both countries.

Oilseeds have been squeezed, particularly as farmers replaced the crop, planting wheat to fill the shortfall left by the collapse in wheat production. Oilseed production dropped by a fifth in some big producing countries, including Canada and Australia.

Opportunities

In this three-dimensional chess game of cause and effect that has run round different crops to cause the crisis, there are some opportunities.

Despite its central importance in life, agriculture has been a forgotten sector in the world economy for several decades.

Real prices, taking account of the effect of inflation, have declined.

A banner displayed by Greenpeace activists is seen at the ruins of the Machu Picchu as the fifth summit of heads of state and government of Latin America, Caribbean and the European Union in Lima in May 2008.
Environmentalists believe biofuels are to blame for high prices

But that decline has now been arrested for the first time, so for the first time investment is worthwhile.

Alongside recommending a major increase in food aid to get over the immediate crisis, the FAO summit is expected to make proposals to invest in training, education, research and development, and transport infrastructure, particularly in Africa.

The presence of the former UN Secretary General Kofi Annan at the summit means that more attention will be paid to his proposal for a "green revolution" in Africa, matching the increase in yields that transformed farming in Asia a generation ago.

This could include a demand to increase biotechnology, despite the opposition of consumers in the developed world, particularly Europe, to GM crops.

Biofuels controversy

But the biggest political argument at the summit is likely to be around biofuels, now actively encouraged in a number of countries as a way of reducing dependence on oil and coal.


Biofuels are clearly a major competitor for land needed for food production

The FAO summit document is clear about the impact of biofuels, saying it has been more important in pushing up food prices than the huge increase in the price of oil.

Three-quarters of the increase in maize production worldwide in 2007 was for biofuels.

And the presence of President Lula of Brazil, among a number of other heads of state at the summit, means that this issue will be hotly debated.

Brazil is the world's most enthusiastic producer of biofuels, despite increasing evidence that the technology may not be the clean solution that was initially believed.

Biofuels are clearly a major competitor for land needed for food production.

Protesters outside the summit will also be demanding a fair conclusion to the Doha round of trade negotiations at the World Trade Organisation, now going on for seven years.

It was originally designed to be a "round for the developing world", but has become bogged down amid competing interests.

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