Global Food Prices and U.S. Policy

In yet another ratcheting up of attention to the soaring cost of food and the implications for the world’s poor, the head of the UN’s World Food Program, Josette Sheeran (formerly an Under Secretary of State), advises that it is considering plans to ration food aid. Food prices rose 40 percent last year, due primarily to rising demand. The FAO has estimated that, as a result, poor countries could see their cereal import bill rise by more than a third this year, with Africa projected to see a nearly 50 percent increase. Sheeran notes that, “If food is twice as expensive, we can bring half as much in for the same price. . . . It will take increased contributions to make sure we can meet those already assessed needs.” This is especially critical in many conflicted and remote areas where the WFP is the only source of food for many people.

The impact is already being felt around the world. Food riots have broken out in Morocco, Yemen, Mexico, Guinea, Mauritania, Senegal and Uzbekistan. Pakistan has reintroduced rationing for the first time in two decades. Russia has frozen the price of milk, bread, eggs and cooking oil for six months. Thailand is also planning a freeze on food staples. After protests around Indonesia, Jakarta has increased public food subsidies. India has banned the export of rice except the high-quality basmati variety.

What’s true of the WFP is also true of U.S. food aid – rising prices mean the money buys less. Food aid commodity prices in the U.S. – all U.S. food aid must be procured in the U.S. --are already up 40 percent in the past year. And with U.S. food aid the problem is compounded because the food must then be shipped to the area of need, and the costs of ocean freight are also soaring – up nearly 100 percent from June 2006 to June 2007 – due largely to increased fuel costs. However, attempts by the Administration to obtain some flexibility in U.S. food aid procurement policy – to enable up to 25 percent to be procured closer to the area of need, thus obviating the need for costly and time-consuming ocean shipping – continue to be stymied by Congress. The cost of this continued deference to vested interests will be borne by the world’s poorest, in lives and welfare. This is not right.