US: April 11, 2008


WASHINGTON - British Prime Minister Gordon Brown on Wednesday called for a coordinated response led by the United Nations, World Bank and International Monetary Fund to address soaring food prices.


In an April 8 letter, Brown asked Japanese Prime Minister Yasuo Fukuda, as chair of Group of Eight industrial nations, to request the international agencies develop a global strategy to address the problem of rising food costs.

"For the first time in decades, the number of people facing hunger is growing," Brown wrote in the letter, a copy of which was obtained by Reuters ahead of World Bank and IMF meetings in Washington this weekend.

"The international community needs a fully coordinated response," he added. "I would propose that you, as chair of the G8, ask the World Bank, the IMF and the UN to urgently work together to lead the development of an international strategy to address all the elements of this crisis."

Among the responses he cited, was a redoubling of efforts to reach a Doha global trade deal, improving agricultural output in developing countries, boosting support for farm research; and examining the impact of different biofuels methods.

Brown also called for World Bank and IMF financial support for countries facing balance of payments difficulties because of the price hikes. He said market-based risk management instruments, including derivatives, could also be considered to avert food price volatility.

In addition, urgent action was needed to explore the impact of climate change on the livelihoods of the poor, he said.

A combination of rising fuel costs, more demand for food in wealthier Asia, the use of farmland and crops for biofuels, bad weather and speculation on futures markets have all pushed up food prices, prompting violent protests in a handful of poor countries.

In the latest rioting, at least five people were killed in a week of demonstrations in Haiti over the rising costs of food, while unions in Burkina Faso in West Africa called a general strike over the rising cost of living.

Brown's letter came as the World Bank said on Wednesday that rising global food costs are not a temporary phenomenon and prices are likely to stay above 2004 levels until 2015 for most crops.


POLICY RESPONSES

In the policy paper prepared for the weekend IMF and World Bank meetings in Washington, the bank said food prices are set to stay high in 2008 and 2009, and then decline as supply and demand respond to high prices.

World Bank President Robert Zoellick said he feared the higher food prices would reverse declining poverty levels in some countries. Last week, Zoellick also called for a global response to tackle the food crisis.

"As an international community we must rally not only to offer immediate support, but to help countries identify actions and policies to reduce the impact on the world's most vulnerable," Zoellick said on Wednesday.

The Bank suggested that the least disruptive policy response to dealing with higher prices was for countries to introduce or expand cash transfer programs to the poor.

"These support the purchasing power of the poor without distorting domestic incentives to produce more food, and without reducing the incomes of poor food sellers," it said.

To tackle domestic food insecurity, it also said countries should cut tariffs and taxes on key staple foods, which could provide some relief to consumers, albeit at a fiscal cost.

It said food export bans were detrimental to food importers and dampened incentives by farmers to increase production.

The World Bank said there had been a sharp surge in domestic food price inflation especially in Sri Lanka (34 percent), Costa Rica (21 percent) and Egypt (13.5 percent).

It said so far countries were seeking its help with assessing economic and social implications of rising food costs, as well as possible policy responses.

The bank said it was too early to say gauge the extent to which countries may need World Bank loans to fill funding gaps caused by rising food prices.

The development agency said high food prices highlighted the need for the World Bank and other donors to increase investments in agriculture. The bank has already said it will increase lending to Africa's farming sector and back private-sector initiatives in this area.


Story by Lesley Wroughton


REUTERS NEWS SERVICE