Main menu

Controlling a Food Crisis

Beans at a Costa Rican market. (AP images)

June 02, 2008

World leaders assembled in Rome this week for a conference aimed at tackling the world food crisis at a time when the World Bank predicts rising food prices could push 100 million people into poverty around the globe. Before heading to the conference, UN Secretary-General Ban Ki-moon raised concerns about food security in the Western Hemisphere’s poorest country, Haiti. “The island’s fragile governance and deteriorating living conditions have created a volatile and potentially dangerous atmosphere,” said Ban.” 

While the situation in Haiti—where the prime minister stepped down in March following food riots—may appear particularly dire, the impact of rising food prices is being felt across the Americas. World Bank data shows that, while the region serves as a net exporter of food, seven Latin American countries experienced double-digit food price inflation in 2007.

While most of the region has thus far resisted falling prey to the economic slowdown affecting the United States, inflation is on the rise in much of Latin America. In May, the Inter-American Development Bank increased the region's expected average inflation rate (PDF) for 2008 to nearly 8 percent for the region.  “Food is the main culprit,” explained Luis Oganes, Head for Latin America, Emerging Markets Research Group, JP Morgan Chase & Co, speaking at an AS/COA roundtable discussion on the Andean region. Roughly 45 percent of inflation across Latin America relates to food prices, said Oganes.

Argentina is among the countries experiencing the twin challenges of inflation and food shortages. The administration of President Cristina Fernández de Kirchner, one of the UN conference attendees (audio), has dealt with weeks of on and off strikes by farmers protesting export taxes imposed on grains in March. In the face of widespread protests and bare market shelves, the government agreed to lower the tax rate last week. Yet farm leaders, depicting the move as too little too late, agreed to restart demonstrations. Six months into her presidency, Fernández finds her popularity rating falling as a result of the standoff, reports TIME. The Christian Science Monitor offers a closer look at inflation in Argentina, as well as in countries such as Venezuela and Bolivia

Several Latin American countries seek to stave off the food crisis by raising awareness and setting up credit mechanisms. Heads of state met in early May in Managua, where countries agreed to pump up food production. On June 1, Central American diplomats led marches in their country’s capitals to draw attention to hunger in Central American nations. The Costa Rican government announced in May that it would create a $70 million fund to address nutrition issues and hunger. In Peru on Monday, President Alan García announced an emergency credit program for potato farmers to help offset rising fertilizer costs. And, last week, the Inter-American Development Bank announced its creation of a $500 million credit line for countries seeking to counteract the negative effects of rising food prices. A Miami Herald article focusing on Haiti’s crisis describes a policy debate over whether “to provide food directly to the hungriest, cash to groups that best know the local needs, or cash to governments for subsidized food staples.” 

Several leaders and organizations blame ethanol production for the rise in food prices. Brazilian President Luis Inácio Lula da Silva, speaking at the UN conference, called the targeting of biofuels an “oversimplification,” saying that ethanol from sugarcane does not inflate food prices as much as ethanol produced from corn. 

A recent AS/COA hemispheric update takes a closer look at how rising prices affect Latin America and the future of regional food supply.