Financial crisis may worsen food crunch it eclipsed
Although commodity prices for a wide range of crops have fallen by as much as 50 percent from record highs in June, the financial crisis is expected to make food shortages dramatically worse.
Phnom Penh, Cambodia
Call it crisis eclipse.
The global food crisis that dominated headlines earlier this year has been overshadowed by this fall's financial crisis, but it continues to exact a crippling toll on the world's poor. And, although commodity prices for a wide range of crops have fallen by as much as 50 percent from record highs in June, the financial crisis is expected to make it dramatically worse: credit for farmers could dry up, meaning less money to buy fertilizer and seed, leading in turn to greater global shortages of food.
Money for food aid could dry up as well. In June, governments and donors pledged $12.3 billion for the food crisis. So far, only $1 billion has actually been disbursed, as lending institutions and governments instead scramble to save ailing banks.
"My concern is that with the food crisis out of the headlines, policymakers will assume it's not a problem. Another worry is that, [with the financial crisis], there will simply be less money to invest in agriculture. We've got to turn that around," says Robert Zeigler, the director general of the International Rice Research Institute (IRRI) in the Philippines. (Editor's note: The original version misspelled Mr. Zeigler's name.)
Some factors contributing to the food crisis have ebbed, which adds to the notion that the worst is over.
The price of oil, needed to transport food to markets, has dropped from July highs of nearly $150 a barrel to around $50 today.
Corn, soybean, and wheat prices have fallen about 50 percent from record highs earlier in the year. And many of the restrictions set by grain-exporting governments like Vietnam, China and India – all of whom feared shortages and effectively hoarded grain supplies, causing prices to shoot up further – have now been eased, meaning supplies have stabilized and prices have come down accordingly.
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