World Bank approves funding for food crisis
World Bank President Robert Zoellick on Thursday announced $1.2 billion in loans and grant financing to expand its assistance to poor countries struggling with the effects of soaring fuel and food costs.
The funding will be fast-tracked to governments needing budget support, or seeking help with cash and food programs for the poor, while also boosting food production through supplies of seeds and fertilizers for farmers. The announcement comes ahead of a world food summit in Rome on June 3-5 and meetings of finance and political leaders from the Group of Eight industrial nations.
Zoellick called on leaders to move to action, as food inflation and higher food costs cut into already stretched government budgets and raises fears of further food protests. “As we go into the Rome meeting next week, it is crucial that we focus on specific action,” Zoellick told reporters on a conference call. “Along with our partners, these initiatives will help address the immediate danger of hunger and malnutrition for the two billion people struggling to survive in the face of rising food prices, and contribute to a longer-term solution that must involve many countries and institutions,” he added.
Zoellick said Haiti, Djibouti and Liberia would benefit right away in grant funding of between $5 million to $10 million each under the new rapid response facility. Financing for Tajikistan, Togo and Yemen would be considered by the World Bank board in June, while a request for help by another seven countries is under review, he added. Meanwhile, assessments on the needs of countries were being conducted in more than 25 countries in cooperation with other international agencies, he added. In addition, he said the World Bank would create a trust fund where donors could contribute funding for seed and fertilizer supplies for small-scale farmers ahead of the next planting season. “This is not an issue like HIV/AIDS where you need some research breakthrough. People know what to do,” he said, “We just have to make sure we get the resources and coordinate the operations around the world,” Zoellick said.
Zoellick was one of the first international leaders to warn in January about the rising cost of food and called attention to the danger of increasing malnutrition and hunger. He also launched talks with African governments on a new bank strategy for agriculture, acknowledging the sector had been neglected. Food prices have noticeably soared since last year amid droughts, increasing biofuels production and changing diets in emerging economies, affecting prices of key staples maize, rice and wheat. At the same time, oil has risen to record highs.
Zoellick said the World Bank would increase lending for agriculture to $6 billion next year from $4 billion in 2008, to boost global food production and revive farming in countries where it has long been neglected. He said global food production would need to double over the next 30 years to feed the world’s population, which also created opportunities for countries to develop farm land and agribusinesses. Of the increased spending on agriculture, the World Bank plans to scale up lending in Africa to $800 million from $450 million, and to $400 million from $250 million in Latin America. In addition, it expects to provide $1 billion for new projects in South Asia for agricultural and rural development.
Zoellick also said the World Bank was looking to launch weather derivatives for poor countries through financial markets, starting with Malawi, to protect them against rising prices for food imports in case of droughts or floods. The derivative would be linked to an index that measures rainfall. When the rainfall falls below a certain level it will trigger a payout to the country. The agency is also developing crop and livestock insurance for poor farmers by creating a company that would underwrite index-based weather and other catastrophe risks, he said. (Reuters)
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