Mr. Mason Smith, Chief Executive Officer (CEO), Ministry of Agriculture, Fiji,
Ladies and Gentlemen,
A very good morning to all of you.
First of all, on behalf of my FAO colleagues and myself, allow me to convey warm greetings and welcome you all to Nadi and to this Sub-Regional Consultation on Policy and Programmatic Actions to Address High Food Prices in Asia and the Pacific Region. We are greatly honoured and privileged to have you all here attending this important event, despite of short notice and your busy schedule. I wish to acknowledge with gratitude the participation of many senior government officials and representatives of development partners.
The Asia and Pacific region, as you all know, has achieved dramatic progress towards reducing poverty and hunger in the past three decades. Economic growth and per capita GDP growth in this region has far exceeded other regions in the whole world. However, the fruits of economic growth have not been shared equally across countries and among the people within the countries of the region. As a result, widening inequality and disparity is seen in many countries in this region and the Asia-Pacific region as a whole is not on track in meeting the World Food Summit and MDG targets of halving the number and proportion of undernourished population, respectively. The latest estimates show that the proportion of the hungry has declined from 20 percent in base year 1990-92 to 16 percent in 2010 and the number of undernourished declined from 586 million to 578 million in 2010 in Asia and the Pacific. Even this small progress is a result of achievements by a few countries in this region; in some countries the number of undernourished has increased instead of declining. Therefore, achieving the MDG No.1 goal to halve (reduce to 10 %) the proportion of extreme hunger by 2015 and other hunger reduction target is one of the daunting development challenge in this region.
Low and stable food prices are crucial for food security of the poor. High food prices force the poor to reduce their purchasing power, food consumption and/or expenditure on essentials such as education and health. If the high food prices persist for long, the poor may be forced to sell their income-generating assets, sleep with hungry stomach, suffer from hunger or create social unrest as it has already happened in some countries. Therefore, soaring and volatile food prices are a matter of great concern for FAO and its member countries.
Two months ago in February, the FAO food price index rose to 236 points, its highest level ever, led by sugar prices, vegetable oil prices and cereal prices. Within cereals, wheat prices on international markets rose by 7 percent in February from previous month, 75 percent higher than a year earlier. While international bench mark rice prices were stable, international prices of maize increased sharply by 9 percent in February and stood 77 percent higher than one year ago.
The FAO food price index slightly declined to 230 points in March, but it is still 37 percent higher than one year ago. International prices of oil and sugar dropped the most, followed by wheat. By contrast, the price of maize which is also used for animal feeds, remains record high level and consequently dairy and meat prices were up. In overall the cereal price index was lower than in February, but still 60 percent higher than one year ago. While the decline in the food price index is a welcome development, it may not be a reversal of the upward trend in view of anticipated continuous rise of crude oil prices which has increased already by nearly 30% in past 5 months. The hike of crude oil price would also affect the price of fertilizer, transportation costs, cost of irrigation, etc. and eventually would result in high food prices. Moreover, the projected growth in cereal production in 2011 may not be sufficient to replenish the reduced stock level in 2010 due to the lower cereal production in that year. In addition, food prices are increasingly affected by external shocks such as drought, floods and cyclones. The frequency of natural disasters are also increased in recent past together with negative impacts of climate changes.
Ladies and gentlemen,
Positive changes in food prices in the world market are not necessarily transferred to domestic retail prices due to policy, market structure and infrastructural constraints. For example, while rice prices were stable in the world market, in Indonesia and China retail prices of rice reached record highs in January 2011 and were 23 percent above their levels of a year earlier; in Bangladesh they were 33 percent higher. Therefore, we have to monitor how these movements in world market prices are transferred to the local level and what can be done to enhance the efficiency of price transmission.
Most of the poor and undernourished in this region live in rural areas and depend, in one way or another, on agriculture for a living. They also spend a large proportion of their income on food. Furthermore, a large portion of small farmers are net buyers of food. Agricultural growth in general and the growth of productivity of small farms are therefore critical for the ensuring food security.
On the other hand, in case of the Pacific sub-region, there is emerging trend of urbanization with higher population density in some Micronesian countries rivaling the highest in the world. Urbanization is also an accelerating trend in Melanesia large urban centers in Port Moresby, Honiara and Port Villa. Poor urban families are one of the most vulnerable groups to rising food price in the society who spend 50-70% of their household incomes on foods.
One of the major causes for the rising and volatile food prices is the slow down in the growth of productivity of major cereals as the public and private sector investments were diverted away from agriculture to other sectors. Maintaining yield growth is particularly important in this region, where there is very little scope for further expansion of arable area. Yet the growth rates of wheat and rice yields in this region were 0.8% and 0.5% respectively, much lower than the pace of population growth.
In addition to immediate short-term food insecurity problems, we are going to face medium to long-term challenges in the future as the world population is projected to grow to 9.1 billion by 2050 from 6.9 billion today, with the majority of the increase occurring in developing countries. At the same time, people’s incomes are rising with economic growth, and that also raises the demand for food. FAO’s projections indicate that world food production will have to increase by 70 percent by 2050 to meet the increased demand. In developing countries, it has to be increased by 100 percent. This is admittedly a difficult task as arable lands are almost fully exploited in this region, water resources are declining, more food grains would be converted into bio-fuel and animal feeds, higher competition between food crops and energy crops on the use of land and water, and increasing frequency of natural disasters. However, one should remember that during the Green Revolution, cereal production was tripled in 40 years. Surely, it should be possible for us to double cereal production over the next 40 years by 2050, if we maximize our wisdom of science and technology gained from past experience, and if sufficient resources are invested in agriculture.
I wish to emphasize that increasing agricultural productivity of resource poor farmers, including women farmers, will require increased public and private sector investment in agricultural research, and infrastructure – irrigation, roads, marketing and storage facilities, to reduce post-harvest losses, etc. – as well as value chain development.
However, the proportion of resource allocation to agriculture has steadily declined in the last decades. The proportion of ODA meant for agriculture declined from nearly 20 percent in the early 1980s to barely 5 percent today. In many developing countries of this region, the proportion of government budgets devoted to agriculture and rural development has declined sharply over the same period. The neglect of agriculture and food production by the international community and national governments must come to an end. This is a prerequisite for dealing with food price spikes.
FAO advocates a twin-track approach to hunger reduction in which measures to increase productivity, especially of resource-poor farmers and landless labourers, are complemented by measures to broaden direct access to food for the most needy.
This requires first and foremost, mobilizing political will and building up global awareness and solidarity. It is also critical to harmonize global policies on trade, markets, and food and energy security.
Secondly, policies must aim at achieving broadly-based, inclusive economic growth. This requires, in particular, actively promoting gender equality and empowering women in agriculture and rural employment. Minimizing post harvest losses is another high priority, since 20-40% of foods are lost after harvest.
Policies must also focus on strengthening the ability of poor rural and urban communities to respond to natural disasters, new pressures, uncertainties and shocks and to develop and conserve natural resources. In the context of the Pacific sub-region one should not underestimate the role of traditional social safety nets, and the importance of traditional agricultural systems and domestic food resources in maintaining these networks.
However, these measures will take a long time to have a significant impact on hunger. Hungry people cannot wait, so direct and immediate action to establish sustainable, targeted safety nets for the poor and vulnerable groups is required. These include targeted direct feeding programmes, such as school meals; “food-for-work” programmes to provide support to poor households while developing useful infrastructure; and income-transfer programmes, such as conditional cash transfers and cash voucher schemes.
In conclusion, to repeat what I said earlier, we cannot allow the food price crises from 2007-08 to occur once again, nor should we abandon all hope of meeting the World Food Summit and MDG-1 targets. In considering measures to prevent such crises from recurring, it is vital to recognize that no individual country can solve the problem on its own. We are all interdependent and we all have much to learn from one another. At the same time, we must recognize that there is no single unified solution that works for all countries.
Keeping these facts in mind, FAO decided to hold Sub-Regional Consultations around the world to facilitate exchange of information, learn from each other’s experience and deliberate on the actions that we need to take, by ourselves and also in cooperation with other countries and regional organizations, development partners, international agencies, civil society and others.
Finally, it is my hope that by the end of this Consultation we will all have achieved a better understanding of the nature and causes of rising food prices and of potential solutions. I also hope that you will have a better appreciation of the resources that are available at the national and subregional levels from development partners, in addition to domestic resources. This will be of great help to you in devising policies and programmes to deal with the high and volatile food prices.
Millions of poor and undernourished people in this subregion and elsewhere in the world stand to benefit if we can draw the right lessons and implement them. I wish you all success in your deliberations.
Thank you very much.