"Latin America and the Caribbean have understood this and this was the first region to take on the challenge of fully eradicating hunger and not only diminishing it, by launching the Hunger Free Latin America and the Caribbean Initiative in 2005", he added.

Graziano da Silva highlighted the many initiatives that have emerged in the region, such as Hunger Zero in Brazil and the Crusade Against Hunger in Mexico - launched this week - which will help more than 7.4 million Mexicans living in extreme poverty and food insecurity.

"When a country decides to say 'no more hunger', the improvements that can be achieved are surprising," said the FAO Director General.

Graziano also highlighted the fact that Antigua and Barbuda has joined the UN Zero Hunger Challenge: Zero Hunger in Antigua and Barbuda has the full support of the FAO, and other agencies such as the World Food Programme (WFP), the World Bank, the Inter-American Institute for Cooperation on Agriculture (IICA),  the Economic Commission for Latin America and the Caribbean (ECLAC), the Pan American Health Organization/World Health Organization (PAHO/WHO), and the United Nations Children's Fund (UNICEF), as well as the Caribbean Community and Common Market (CARICOM).

Latin America on the front line  against hunger

Latin America and the Caribbean has become a benchmark in the global fight against hunger. In the last 20 years, 16 million people have ceased to suffer hunger in the region.

 In 1990-1992 hunger affected 14.6 percent of the population, or 65 million people, while in 2010-2012, it affected only 8.3 percent, or 49 million people. Add to this significant legislative advances: currently seven countries in the region already have food security laws, while another ten are developing legislation on the matter.

Hunger in the region is fundamentally a problem of access to food and not of food availability, Graziano said: "Latin America and the Caribbean, with a population of 600 million people, produces enough food to feed 750 million people. However, 49 million of the current population still suffer hunger," he said.

The Hunger Free Latin America and the Caribbean 2025 Initiative has provided strong support to this process by promoting the fight against hunger and the realization of the right to food, with action such as the creation of Parliamentary Fronts Against Hunger, which already exist in 14 countries

Tackling food waste

"A sustainable world requires not only that production be sustainable, but also consumption," said the Director General of the FAO.

Graziano da Silva said that globally, a third of all food produced is wasted, and he stressed that if one could avoid this waste "it would be possible to feed all the hungry people and have food to spare."

In Latin America and the Caribbean, losses and waste of food for retail during the production phase reach 200 kg per capita per year. At the consumer level, 25 kilos per capita per year are wasted. In cereal production, losses reach 30 percent of the grains produced, 40 percent of roots and tubers, 55 percent of fruits and vegetables, 20 percent of meat, almost 30 percent of fish and seafood, and more than 20 percent of dairy products.

"France shares FAO's and the UN's position that we are not in a food price crisis, but we need to remain vigilant," said Graziano da Silva.

During the meeting, Graziano da Silva recognized the role played by France in placing food security and food price volatility on the international agenda.

President Hollande has said that "the old order has gone but the new one has not yet emerged," including the need to create new governance arrangements to adequately address hunger and new challenges to world food security in the long-run.

"We thank France for its leadership in these issues," said Graziano da Silva. "The establishment by the G20 of the Agricultural Market Information System in 2011 is important to improve market information and reduce volatility," added Graziano da Silva.

AMIS was set up in 2011 to improve transparency and information flows on global markets and, through its Rapid Response Forum, to promote better coordination of policy responses to food price volatility.

France has been chair of AMIS since it was created. At the end of September, the United States assumes the chair for a 12-month period.

"France has done a very good job in chairing AMIS in its first year," said Graziano da Silva.

The Director-General voiced his support for convening a meeting of the G20 agricultural ministers at FAO headquarters in Rome on 16 October, an opportunity presented by the fact that some ministers have already confirmed their presence for the World Food Day Ceremony and the Committee of World Food Security Session that will take place that week.

The proposed meeting would allow a review of the progress made towards
better governance of food markets since the establishment of AMIS.

In their first official meeting, Hollande reaffirmed his commitment to the Organization and praised the work being done by Graziano da Silva.

Food stocks

One option discussed to address the impact of food price volatility was the creation of strategic food security stocks to provide emergency relief in a crisis, targeting the poor countries.

France confirmed its support to a code of conduct for emergency humanitarian food reserve management. Work on this code of conduct is being started and will include all stakeholders, said the Director-General.

They stressed that such stocks should not be designed for any intended market intervention to set a ceiling on prices, but rather, could serve together with other safety net mechanisms as cushions in the event of any threat to national food security.

Sahel

The need to increase short, medium and long-term support to poor developing countries, such as those from the Sahel, was also a topic at the meeting in Paris.

"We will work together with other partners to increase assistance to the countries in the Sahel. Our focus will be to prevent further crises and to reinforce the resilience of vulnerable populations there, with a special emphasis on promoting agricultural investments and supporting the livelihoods of pastoralists," the FAO Director-General explained.

FAO's emergency programme in the Sahel currently benefits 3.8 million people in food and livestock production, domestic animal protection, related technical assistance and desert locust control activities.

Africa's Sahel region has been hard hit by a series of droughts, conflict and plant pests. Currently, 18.7 million people are facing food and nutrition insecurity in this region.

The increased support to the Sahel was discussed in the framework of a new cooperation agreement signed by France and FAO.

France and FAO renew framework agreement

During the Director-General's visit to Paris, France and FAO signed a four-year accord to strengthen cooperation.

The agreement strengthens the already solid cooperation that exists and focuses on emerging food security and agriculture issues: the need for greater sustainability in our food system, the need to increase resilience in vulnerable populations, the need to reinforce our global standard-setting work and bring this to the country level and the need to continue increasing the participation of all stakeholders - governments, international and regional organizations, the scientific community, the private sector, civil society and non-governmental organizations.

The Director-General and the Minister Delegate for Development of France, Pascal Canfin, signed the agreement in a ceremony also attended by the Minister of Agriculture of France, Stéphane Le Foll.

World Organisation for Animal Health

Earlier in the day, Graziano da Silva met with Bernard Vallat, Director General of the World Organisation for Animal Health (OIE), which is headquartered in Paris. They agreed to work on a formal accord to address the overlaps in the mandates of the two agencies and facilitate and improve cooperation.

Priority issues mentioned during the meeting included the progressive control of transboundary animal diseases; joint strategies and working groups on foot-and-mouth disease (FMD), peste des petits ruminants (PPR) and rift valley fever (RVF); placement of regional animal health centres; joint work on food- and wildlife-borne diseases; aquatic diseases and aquaculture.

Graziano da Silva pointed out that FAO's work in this area should focus on the organization's core mandate to fight hunger, malnutrition and extreme poverty.

Tackling the root causes of high food prices and hunger

by José Graziano da Silva, Kanayo F. Nwanze and Ertharin Cousin*

Two interconnected problems must be tackled: the immediate issue of some high food  prices, which can impact heavily on food import-dependent countries and on the poorest people; and the long-term issue of how we produce, trade and consume food in an age of increasing population, demand and climate change.

In responding to those challenges, we are better placed today than five years ago. We have developed new policies and new instruments, like the United Nations High-Level Task Force on Global Food Security and AMIS, the G20's Agricultural Markets Information System, which improves transparency in global markets. We also have the AMIS-related Rapid Response Forum, set up to facilitate coordinated policy responses by the major world producers and traders of key cereals and soybeans in the event of market upheavals.

We have learned that not all are affected in the same way - the urban and rural poor and people in food import-dependent countries are most vulnerable to international commodity price increases, when these are transmitted to local markets, because they spend the largest proportions of their incomes on food.

We have also learned that smallholder farmers, many of whom are also poor and food insecure, can be enabled to benefit from higher food prices and become part of the solution by reducing price spikes and improving overall food security.

We have thus adopted a twin-track approach which supports long-term investments in agriculture, notably smallholder agriculture, while ensuring that safety-nets are in place to help poor food consumers and producers avoid hunger, asset losses and poverty traps in the short run.

Many countries have social protection systems including safety nets - such as assistance for smallholder farmers, nutritional support to mothers and children, and school meals - to ensure that their poorest citizens have enough to eat; yet, these need to be expanded significantly in poorer countries. Safety nets that are affordable, predictable and transparent are an absolute must if we are to safeguard against recurring price shocks and crises.  

Small-scale food producers also need to be better equipped to raise their productivity, increase their access to markets and reduce their exposure to risk. And, of course, people need decent jobs and incomes so that they can afford the food they need and escape from poverty.

In responding to high food prices, the things we must avoid doing are just as important as the things we should do. In particular, countries must avoid panic buying and refrain from imposing export restrictions which, while temporarily helping some consumers at home, are generally inefficient and make life difficult for everyone else.

Above all, however, we must understand that high food prices are a symptom, and not the disease. So while the international community must take early action to prevent excessive price increases, it should also move to act on the root causes behind such surges.

There have been three international food price spikes in the last five years. Weather has been among the drivers of each. Droughts in some part of the world have impaired global grain production virtually every other year since 2007. Elsewhere, major floods have also caused severe damage to crops. Increased diversion of food stock for non-food purposes and increased financial speculation are among the various drivers of increased  price levels and volatility.

Until we find the way to shock-proof and climate-proof our food system, the danger will remain. In the short term, this has costs, not only for those directly impacted, but also for the international community at large. For instance, the World Food Programme (WFP) estimates that every 10 per cent increase in the price of its food basket means it has to find an extra $200 million a year for food assistance.

We are vulnerable because even in a good year, global grain production is barely sufficient to meet growing demands for food, feed and fuel - this, in a world where there are 80 million extra mouths to be fed every year. We are at risk because only a handful of nations are large producers of staple food commodities, and when they are affected, so is everyone else.

The challenge - and the opportunity - is both to reduce and to spread that risk. And the most obvious way is to promote sustainable food production in poor, food-importing countries, where there is often huge potential to improve production. That would make more food available in local markets and provide jobs and income, especially in rural areas where 70 per cent of the world's poor live. We should also address the fact that, globally, one third of food produced is wasted or lost to spoilage, damage and other causes.

The Food and Agriculture Organization of the UN (FAO), the International Fund for Agricultural Development (IFAD) and the World Food Programme are helping poor people to eat today while building their resilience and capacity to feed themselves tomorrow. But more needs to be done.

We need to invest much more in agriculture and social protection, including programmes that help poor people to access food that has become unaffordable in their local markets.

Lastly, we also need to review and adjust where applicable policies currently in place that encourage alternative uses of grains. For example, adjusting biofuel mandates when global markets come under pressure and food supplies are endangered has been recommended by a group of international organizations including FAO, IFAD, the International Monetary Fund, the Organisation for Economic Co-operation and Development, the UN Conference on Trade and Development, WFP, the World Bank and the World Trade Organization. That recommendation, made to the 2011 G20 summit in Paris, still stands today.
 
In moving to prevent a possible deterioration of the situation, we need to remain vigilant and prepare for the worst in the short run, while working on sustainable solutions for the long haul. Not to do so would inevitably mean that the world's poorest and most vulnerable pay the highest price. Getting this right will help us respond to the "Zero Hunger" challenge set by UN Secretary-General Ban Ki-moon of eradicating hunger from the globe.

*The authors are respectively the Director-General of the Food and Agriculture Organization of the United Nations, the President of the International Fund for Agricultural Development and the Executive Director of the UN World Food Programme.

"For consumers, especially for the millions of people living in extreme poverty, high food prices have caused considerable hardship. We need to redouble our efforts to bring down the number of hungry people. We must focus on increasing sustainable productivity growth, especially in developing countries, and especially for small producers," said FAO Director-General José Graziano da Silva. "High real prices for agricultural commodities provide higher incentives for farmers and rural development, especially where markets are open and price mechanisms function well, and where farmers also have the capacity to respond."

Sustainability concerns

The Outlook notes that 25 percent of all agricultural land is highly degraded. Critical water scarcity in agriculture is a fact for many countries. Several fish stocks are over-exploited or at risk. There is a growing consensus that extreme weather events are becoming more frequent and climatic patterns are changing in many parts of the world.

Beyond its call for complementary policies to address productivity and sustainability, the report recognizes that the private sector will play the lead role in agriculture going forward.

Governments should encourage better agronomic practices, create the right commercial, technical and regulatory environment and strengthen agricultural innovation systems (e.g. research, education, extension, infrastructure), with attention to the specific needs of smallholders.

Creating the right enabling environment also means ensuring that the business climate is conducive to domestic and foreign investments, so governments should limit trade restrictions as well as those domestic support schemes that distort incentives for production and investment in agriculture.

There is a need to develop national investment schemes and increased development assistance to agriculture for research and development, innovation adoption and infrastructure development, the report said.

Developing countries should promote agricultural infrastructure investment in rural areas to improve storage, transportation and irrigation systems, as well as electrification, information and communication systems. Investment in human capital is equally important and depends on more public spending on health care, education and training.

These policies should also address the reduction of food loss and food waste, pegged by a recent FAO study at roughly one-third of food produced for human consumption, in order to limit the need to increase production and conserve resources.

"While there has been much analysis of food price volatility, including at FAO, more understanding is still needed, especially concerning the impacts of speculation," Graziano da Silva said as he opened the event.

"Let's make one thing clear: We are not talking about speculation related to price discovery and the normal functioning of the futures markets. We are talking about excessive speculation in derivative markets, which can increase price swings and their speed," he added.

"Excessive food price volatility, especially at the speed at which they have been occurring since 2007, has negative impacts on poor consumers and poor producers alike all over the world."

The high-level debate on the theme, "Food Price Volatility and the Role of Speculation," featured as keynote speaker Leonel Fernández Reyna, President of the Dominican Republic. The event drew a panel of international experts in commodities, trade and agriculture.  

President Fernández said food price swings were having a "tremendous human impact" and cautioned against using food commodities purely as financial instruments.

"Financial speculation is exacerbating market fluctuations and this exacerbation is generating uncertainty - this uncontrolled, unregulated exacerbation is provoking a dramatic impact on countries that are net food importers," Fernández said.

"We are not talking about an abstract concept here, we are talking about something that is having a devastating, dramatic and brutal impact on the lives of people," and also puts governments at risk of destabilization, he said.

"I think that this is one of the most serious problems, one of the most important challenges facing us, and which we will need to address with efficiency, transparency and a spirit of solidarity," he said.

Fernández underscored the need for more information to get a clearer picture on market transactions, in order to better understand the role of speculation in agricultural commodities.

President Fernández has been instrumental in getting the United Nations to heighten the attention on the issue of excessive food price volatility. In December 2011, the United Nations General Assembly adopted a resolution presented by the Dominican Republic on "Addressing Excessive Price Volatility in Food and Related Financial and Commodity Markets."

Controversial topic

A UN debate in April 2012 provided an opportunity for Heads of State and Government, along with other high level officials and international organizations, to discuss the issue at a political level, while the FAO event took the process a step further. It looked, specifically, at the extent to which speculative behavior on commodity futures markets was contributing to food price volatility. It also focused on associated regulatory issues.

"The view that speculation contributed to recent price volatility has led to more awareness among governments on the need for the introduction of greater regulation to limit this activity. However, the question of how much and what form of regulation is polemic," Graziano da Silva said. 

In recent years, especially since 2007, the world has seen the reversal of a four-decade-long downward tendency in prices of agricultural commodities. The period between 2008 and 2011 was characterized by a series of extreme peaks and valleys in food pricing which made it especially difficult for economically vulnerable consumers and agricultural producers to cope.

"Food price inflation has already been higher than overall inflation in almost every country. This has a greater impact on the poorer population, who can spend up to 75 percent of their income in food," Graziano da Silva said.

FAO analysis

In 2011, FAO, together with OECD, coordinated the preparation of the inter-agency report to the G20 on this subject. At the request of the G20, FAO also hosts the Agricultural Market Information System (AMIS), aimed at promoting market transparency.

In addition, FAO conducts analytical work to help deepen the understanding of the nature, causes, impacts and responses to volatility. This includes looking into the increasingly complex inter-relationships between agricultural, financial and energy markets.

Championing food security

Before the high-level debate, Director-General Graziano da Silva invited Margarita Cedeño de Fernández, First Lady of the Dominican Republic, to continue serving as Extraordinary Ambassador of FAO, in recognition of the numerous social development projects in food and agriculture which she has undertaken in her own country - many of which have benefited women.

The First Lady was first nominated to the role in 2009. She stressed that she would continue to be at the forefront of the global fight against hunger, malnutrition and poverty.

"The situation in Yemen and Syria reminds us of the clear link between food security and peace. In this case, internal conflict is causing food insecurity. But, it works the other way around as well. Throughout the world we see crisis after crisis caused, in its entirety or in part, by the lack of food or disputes over natural resources, especially land and water," FAO Director-General José Graziano da Silva said.

The report also lists 35 countries in need of external food assistance, including Afghanistan, the Democratic People's Republic of Korea, Haiti, Iraq and Mali. Of the total, 28 countries are in Africa.

"This only goes to show, again, that hunger today is mainly a problem of access. Millions of poor families worldwide lack the means to produce their own food or decent jobs and income to buy the food they need," Graziano da Silva said.

Africa, Near East

West Africa continues to face "increasing food insecurity and malnutrition in several countries," due to a sharp drop in cereal and pasture production in 2011, combined with high local food prices and civil strife.

Escalating conflict in Mali, resulting displacement towards neighbouring countries, and Desert Locust outbreaks moving southward from North Africa are considered additional threats to 2012 agricultural production in the Sahel, especially in Niger, Mali and Chad, FAO said.

In Eastern Africa, the main season rains started late, shortening the crop growing period. Furthermore, floods affected areas in Kenya, Somalia, the United Republic of Tanzania and Uganda, while severe dry conditions persist in parts of northeastern and coastal districts in Kenya.

In North Africa, Morocco is expected to see sharp declines in production following "erratic and insufficient" rains, while the rest of the region is expected to produce above-average harvests.

Unfavourable weather conditions in 2012, including dry spells and cyclones, resulted in cereal production declines in parts of Southern Africa, while high food prices in Malawi worsen food insecurity.

In the Near East, the deteriorating food security situation was cited as a major concern in the Syrian Arab Republic and Yemen as a result of the civil unrest. An estimated 1 million people are in need of humanitarian assistance in Syria due to the impact of the continuing social unrest on households and food distribution channels in several markets.

In Yemen, about 5 million people are estimated to be severely food insecure and in need of emergency food assistance, as a result of high levels of poverty, prolonged conflict and high food and fuel prices.

Ukraine bread basket vulnerable

In the Commonwealth of Independent States (CIS) in Europe, FAO forecasts a six-percent decline in cereal production, to 148 million tonnes, against last year's level. This mainly reflects the unfavourable prospects in Ukraine, where adverse weather conditions during the winter cropping are taking its toll on grain crops. Wheat production is forecast at 14 million tonnes, nearly 40 percent below last year's bumper crop and well below the average of the past five years.

The significant drop in Ukraine, a major food producer in the region, is expected to have an impact on supplies and pricing in neighbouring countries.

In the CIS in Asia, wheat production in Kazakhstan, the major cereal producer in the sub-region, was put at 14.7 million tonnes, one-third below last year's record level.

Asia, Americas see gains

The FAO report forecasts a record increase of 3.2 percent in world cereal production in 2012, totalling an estimated 2 419 million tonnes, mainly on account of a bumper maize crop in the United States.

Record harvests and improved production were expected across much of Asia, North America, Central America and South America.

World cereal stocks for crop seasons ending in 2013 are forecast to increase to 548 million tonnes, up 7 percent from their opening levels and the highest since 2002. This outlook is 4 percent (or 23.5 million tonnes) higher than was reported last month, entirely due to an increase in the forecast for world coarse grain inventories which now stand at 201 million tonnes -- up 20 percent from the previous season's low of 167 million tonnes.

Food prices

Globally, the FAO Food Price Index, which measures the monthly change in international prices of a basket of food commodities, dropped by 4 percent in May due to generally favourable supplies, growing world economic uncertainties, and a strengthening of the US dollar.

It is crucial to build on these lessons and step up efforts to enable the world's most vulnerable people to withstand future shocks and produce the food they need to live active and healthy lives.

World cereal utilization in 2011/2012 is forecast to grow 1.4 percent from 2010/2011, reaching 2 307 million tonnes, just five million tonnes under forecast production.

World cereal stocks at the close of the crop season in 2012 are now expected to stand  six million tonnes above their opening levels.  While wheat and rice inventories are expected to become more comfortable, coarse grains stocks, especially maize, would remain tight.   

The FAO Food Price Index (FFPI) averaged 176 points in August, up nearly nine points from July, FAO said in its latest update on the global cereals supply and demand situation.  The increase - five percent - brought the Index up to its highest level since September 2008, but still 38 percent down from its peak in June 2008.

The FFPI surge mainly reflected the sudden sharp rise in international wheat prices following drought in the Russian Federation and the country's subsequent restrictions on wheat sales. But other drivers included higher sugar and oilseed prices.

World cereals production

FAO's update said that the forecast for world cereal production in 2010 has been lowered by 41 million tonnes to 2 238 million tonnes from 2 279 million tonnes reported in June.

However, even at this lower level, world cereal output in 2010 would be the third highest on record and above the five-year average. Among the major cereals, wheat accounted for most of the cut, reflecting mainly smaller crops in the leading producers in the CIS due to adverse weather.

Under the present forecast world cereal utilization would slightly exceed production in 2010/11. This would trigger a two percent contraction in world ending stocks from their 8-year-high opening levels and a small decline in world cereal stocks-to-use ratio. At 23 percent, however, the ratio would still remain well above the 19.5 percent low witnessed in the 2007/08 food crisis period.

Wheat production

A further cut in the forecast for 2010 world wheat production since FAO's last update  on 4 August puts this year's wheat crop at 646 million tonnes, down 5 percent from 2009 but still the third highest ever. The latest revision reflects a further cut in the estimate of this year's harvest in the Russian Federation to 43 million tonnes (from 48 million tonnes in August) more than offsetting higher forecasts for crops in a number of other countries including the United States and China.

The forecast for world wheat ending stocks in 2011 was also lowered, to 181 million tonnes, down 9 percent from their 8-year high opening level. The stock-to-use ratio for wheat in 2010/11 was projected at 27 percent, down 3 percent from the previous season but still 5 percent higher than the 30-year low in 2007/08. 

Coarse grains and rice markets are more balanced  

World production of coarse grains was forecast to reach 1 125 million tonnes, down 6 million tonnes from the previous forecast in June but up marginally from 2009 and the second highest on record. Maize production was heading towards an all-time high of 845 million tonnes, with expectation of record crops in China and in the United States.

But world barley production was forecast to fall by 22 percent to a 30-year low of only 129 million tonnes in 2010, driven mostly by a sharp cut in production in the CIS and in the EU as a result of poor weather.   

The forecast for global rice production in 2010 was also revised downward and now stands at 467 million tonnes, 5 million tonnes lower than the June 2010 forecast but still 3 percent more than in 2009 and a  historical record. Much of the revision was the consequence of Pakistan's floods but it also stemmed from lower expectations in China, Egypt, India, Laos and the Philippines.

The recent disturbances in  world cereal markets will be examined by delegates meeting at a special one-day session of FAO's Intergovernmental Group on Grains and Intergovernmental Group on Rice convened for 24 September at FAO headquarters in Rome.