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A man eats noodles while monitoring market prices inside a brokerage in Taipei, Taiwan. Financial speculation in foodstuffs has been blamed for volatile prices worsening the problem of world hunger. (Source: Reuters)



Sunday won’t be a day of rest for thousands of Romans. Instead they’ll be ‘Running for Food’, raising money to help poor families produce food in the famine-stricken Horn of Africa. The event is part of World Food Day, the UN Food and Agriculture Organization’s (FAO) annual effort to turn attention to the one billion people—one in every seven—who go hungry every day. 



This year’s theme is ‘Food prices - from crisis to stability’ and spotlights the violent food price surges that pushed nearly 70 million people into extreme poverty in 2010-2011. “Food prices, which were stable for decades, have become increasingly volatile,” says Jacques Diouf, Director-General of the FAO in his World Food Day message. 


Why is this happening? 



Diouf lists the usual suspects—under-investment in agriculture, natural calamities, population growth and increasing demand for meat and dairy products. Grain reserves are at record lows. 



But he also blames “the recent entry of institutional investors with large sums of money into food commodity futures markets” as well as “distorting agricultural and protectionist trade policies”. 



Roughly translated, that’s (1) speculators betting on food price swings and (2) countries giving their farmers money while blocking imports from elsewhere—Europe’s Common Agricultural Policy springs to mind. In this game, the dice are loaded against the poor


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So what needs to be done? 


“Policymakers need to curtail biofuels subsidies and mandates, discourage the use of food crops in biofuels production, regulate financial activity in food markets, and reduce the incentives for potential excessive speculation in food commodities,” said Maximo Torero, co-author of the 2011 Global Hunger Index which was released days before World Food Day by the <a href="http://www.ifpri.org/" target="_blank" class="news_link" title="International Food Policy Research Institute">International Food Policy Research Institute (IFPRI)</a>, Welthungerhilfe, and Concern Worldwide.


“They also need to invest in climate change adaptation and mitigation and safeguard smallholder farmers against extreme weather-related shocks,” he added in his statement. Global warming is increasing the frequency and severity of floods, droughts and storms, climate scientists believe. 


Investing in sustainable small-scale agriculture is therefore critical say food policy experts because most of the world’s hungry, such as the pastoralists starving in the Horn of Africa, are themselves food producers. And investing in women farmers is particularly important, says the FAO. 


For them, stable food prices and accessible markets are essential, as are better farming techniques and technology as well as social safety nets and emergency food stocks when things go wrong.


But there is little they can do if subsidies for corn ethanol production in the U.S. or biofuels mandates in Europe, for example, divert crops from food to fuel thus inflating food prices. The broken food system must be fixed at both ends.


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The Index actually contains good news. Global hunger has declined since 1990, with 19 countries moving out of the bottom categories of “extremely alarming” and “alarming”: Angola, Bangladesh, Ethiopia, Mozambique, Nicaragua, Niger, and Vietnam saw the largest improvements.


However, 26 countries are alarming or extremely alarming, with the worst affected being Burundi, Chad, the Democratic Republic of Congo, and Eritrea. And the Index does not cover recent calamities such as the 2010-2011 food price crisis and famine in the Horn of Africa.


While one billion poor people go hungry, the rich world wastes shameful amounts of food: between a quarter and a third of food purchased is thrown away by Americans, British and Japanese. 


“If Western waste could be halved and the food distributed to those who need it, the problem of feeding 9 billion people would vanish,” calculated The Economist magazine early in 2011.


Top British chef Arthur Potts Dawson hopes to set an example with his vision for sustainable restaurants and supermarkets, where he is slashing food, water and energy waste through reuse, recycling, composting and other means. 



Source: Allianz Knowledge, Allianz SE

World Food Day: Fix the System