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Soaring commodity, fuel prices creating crisis, WFP warns

High food and oil prices have been swelling the ranks of the hungry since last summer, and the crisis may not end for several years, the head of the world's largest humanitarian agency said on Thursday.

Josette Sheeran, executive director of the Rome-based World Food Programme (WFP), said a 40 percent rise in the cost of fuel and commodities such as grain since the middle of last year have raised the cost of food and transport, causing a US$500 million shortfall in her UN agency's budget this year.

Sheeran said it had been put at US$2.9 billion last year, but because of skyrocketing food and fuel costs the WFP needs an extra US$375 million for food and US$125 million to transport it.

After briefing the European Parliament on her agency's dire financial situation, Sheeran told a news conference she saw no quick fix to high fuel and food costs.

"The assessment is that we are facing high food prices at least for the next couple of years," Sheeran said.

The WFP relief agency feeds almost 89 million people in 78 nations, including 58.8 million children. It buys 90 percent of the food it distributes on the open market and only 2 percent from surplus food stocks.

Sheeran blamed her agency's fast rising costs on increases in oil and food commodity prices, the booming economies of China and India, bad harvests and droughts, and a shift to biofuels that leads price increases of foodstuffs such as palm oil.

The net result of this, she said, "is that we are seeing `newly hungry' people" in Latin America, Asia and Africa.

"There are 2.5 million people in Afghanistan who cannot afford the price of wheat," Sheeran said.

According to a recent Afghan government and WFP analysis, wheat prices rose more than 60 percent on average last year, and as much as 80 percent in some locations.

Sheeran said global food reserves were at their lowest level in 30 years and today cover the need for emergency deliveries of 53 days, down from 169 days last year.

She said the issue of rising food costs needs to be addressed by governments as a matter of urgency before it leads to social unrest and malnutrition. She cited recent food riots in Burkino Faso, Cameroon, Senegal and Morocco. However, she didn't outline any steps that governments should take to fix the problem in the world's markets.

A significant factor is that corn, soybeans, sugar cane and other crops are seen as sources of clean and cheap biofuels. This means less grain is available for human consumption driving up prices for basic foodstuffs.

The UN's Food and Agriculture Organization estimates that 91 million tonnes of cereals are diverted to the production of biofuels each year.
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