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The Manyaka Cooperative in western Uganda sells its harvest to the United Nations World Food Programme (WFP). Last year, WFP purchased with cash more food in Uganda than any other country. |
Wheat, rice and soyabean prices in week commencing Feb 4, 2008, hit new all-time highs on the Chicago Board of Trade while corn reached a 12-year high. Grain prices have doubled in the past year. In related news, a record 80 percent of the food purchased for cash last year by the world’s largest humanitarian organisation – a total of 2.1 million metric tons valued at more than US$760 million – was bought in developing countries from Afghanistan to Zambia.
The United Nations World Food Programme (WFP) announced last month that it had bought food in 69 developing countries, with the largest supplier being Uganda, where WFP procured 210,000 tons, enough to provide food to some 3.4 million people for one year.
The surge in commodity prices in recent years has hit poor people in developing countries and the WFP’s food costs have increased by 70 per cent in five years, with 20 percentage points of that in the past six months.
The annual food expenditure of the poorest countries has more than doubled since 2000, according to UN Food and Agriculture Organisation (FAO) estimates.
US wheat exporters have sold more than 15 million bushels a week in seven of the last 11 weeks, well above the US Department of Agriculture's weekly target of about 1 million bushels a week.
World wheat stocks are at the lowest level in nearly three decades. Dry, hot weather in wheat-growing countries, most recently India, Canada and Argentina and a long drought in Australia, have added to the tight market.
Wheat for March delivery jumped 30 cents to an all-time record of $10.33 bushel in trading Wednesday on the Chicago Board of Trade. March soybeans hit a record $13.73 a bushel, before easing back on profit-taking to settle at $13.185 a bushel, down 4.5 cents. March corn also surged to a record $5.2875 a bushel before settling 7.75 cents lower at $5.015 a bushel.
Wheat rose to a record for a third day Friday February 9th on the Chicago Board of Trade, gaining the maximum permitted by the exchange, as the US forecast its lowest stocks in 60 years and global demand outpaced production.
The US will hold 272 million bushels at the end of May, the lowest since 1948 and 6.8% less than expected a month ago, the Department of Agriculture said in a report today. Stocks in the US, the world's biggest wheat exporter, will drop 40% from a year earlier. Wheat futures have more than doubled in the past year as supplies have fallen.
Wheat futures for March delivery rose 30 cents, or 2.8%, to a record $10.93 a bushel in overnight trading on the Chicago Board of Trade. The price has gained 16% this week, rising the 30-cent exchange limit every day.
World Agricultural Supply and Demand Estimates
Win-win solutions
"Local purchases create win-win solutions to hunger. In an era of soaring food prices - which hit hardest those already hungry - such solutions are more critical than ever," said WFP Executive Director Josette Sheeran.
"We are now not only feeding hungry people, but helping to develop sustainable solutions to hunger.”
Soaring prices
One way that WFP is able to offset some of these price rises is to buy food on local markets in developing countries, where prices are sometimes lower and which are located closer to areas where WFP distributes food.
The Financial Times says that the Government Accountability Office, a US watchdog agency, estimates logistical expenses are 65 per cent of total costs for US emergency food aid.
Local support
As food prices rise, helping to support local markets and to keep food affordable to the most vulnerable becomes ever more important.
Much of the food that WFP buys in developing countries is distributed either locally – in the same country where it was purchased – or regionally, thus keeping transport costs to a minimum.
The policy is to buy locally when and where there is an abundance and avoid local markets at times of scarcity, so as not to distort markets.
Expand
The Ugandan 2007 food purchase was valued at US$55 million, out of a total of more than US$1 billion WFP spent on food in domestic markets in Africa between 2001 and 2007.
WFP is currently planning to expand its food procurement activities so they better support sustainable crop production and help address the root causes of hunger.
Reduce risks
WFP says it will purchase more food directly from low income farmers and farmers’ groups, as a partner in agriculture and market development in countries where WFP has operations.
This will help reduce the risks farmers face from uncertain markets, boost incomes and encourage investment in technologies and practices which increase and improve food production.
Out of poverty
The aim is for agricultural markets in Africa to develop in such a way that by 2015, more of Africa's low-income farmers – the majority of whom are women – will produce large surpluses of food, sell them at a fair price and earn sufficient incomes to help them pull themselves and their dependants out of poverty.
“Buying 'local' helps provide more income for small-scale farmers, while saving money for WFP,” Sheeran said.
1. Uganda US$ 54,769,771
2. Ecuador US$ 51,137,045
3. Turkey US$ 44,515,965
4. Pakistan US$ 36,399,122
5. Indonesia US$ 29,452,050
6. India US$ 28,188,917
7. Sudan US$ 24,771,678
8. Kenya US$ 24,404,307
9. Zambia US$ 21,412,392
10. Malawi US$ 20,619,635
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