World Bank President Proposes “New Deal” for Food Aid

World Bank President Robert Zoellick said he supports greater reliance on cash or vouchers instead of commodity aid as part of a "New Deal" for global food policy. He made the comments during a speech he delivered Wednesday at the Hilton hotel in Washington, D.C.

Speaking a week before the International Monetary Fund and World Bank spring meetings in Washington, Zoellick also urged the United States, European Union, Japan, and other industrialized nations to supply the $500 million in additional food supplies that the United Nations World Food Programme has desperately requested. In urban areas across the developing world, rapidly growing food prices and demand are creating "a perfect storm" of hunger and desperation, according to the agency.

"The World Bank Group estimates that 33 countries around the world face potential social unrest because of the acute hike in food and energy prices," Zoellick said. "The realities of demography, changing diets, energy prices and biofuels, and climate changes suggest that high-and volatile-food prices will be with us for years to come."

Staple food costs have risen by as much as 80 percent since 2005. Rice last month hit a 19-year high, and the real price of wheat was at a 28-year high, Zoellick said. Riots are already breaking out in Egypt, Côte d'Ivoire, and elsewhere.

Internationally, the punishing food prices are a result of the growing demand for meat and dairy in China and India, and the preference for wheat rather than rice or maize among the emerging urban middle classes of many developing countries. Rising oil prices are encouraging biofuel production on valuable farmlands. Climate change has triggered local and regional drought, especially on Australia's wheat fields, as well as extreme floods. The depreciating dollar is also hurting efforts by the U.S. Agency for International Development (USAID) to deliver food and other aid.

Many economists agree that one solution lies in granting poorer nations income support in the form of cash or vouchers to help purchase local commodities, rather than flooding developing world food markets with international food. In his speech, Zoellick noted that, "a shift from traditional food aid to a broader concept of food and nutrition assistance must be part of this New Deal." He advocated customizing financial support based on local needs, and perhaps supporting national feeding programs or public works development in exchange for food.

"I applaud hearing his ambitions. They are very respectable," said Nancy Birdsall, president of the Center for Global Development, which sponsored Zoellick's talk. "Linking the bank to hungry people, that's what the World Bank should be doing... But it all depends on whether it all adds up."

Nora Lustig, the Shapiro Visiting Professor of International Affairs at George Washington University, cautioned that local feeding programs in the developing world may not be able to handle Zoellick's expectations. "Can they be put in place quickly enough? In either case, do countries have the fiscal resources to fund these programs whose costs have risen as a result of higher food prices?" she said.

Zoellick also said that the World Bank would nearly double its agricultural lending to sub-Saharan Africa. And with the World Trade Organization's contentious Doha debates possibly nearing an agreement that could reduce agricultural tariffs and subsidies, Zoellick urged immediate action. "There is a good deal on the table," he said. "It's now or never."

The Doha Round's agricultural talks have been on hold since the United States and European Union pulled out over concerns that reducing existing trade barriers on agricultural commodities would hurt domestic producers. According to Lustig, the proposed trade agreement would likely help poorer nations that are net sellers of these goods, but damage poorer nations that are net purchasers.

Ben Block is a staff writer at the Worldwatch Institute who covers everything environmental for Eye on Earth. He can be reached at bblock@worldwatch.org.