The World Bank estimates that 44 million people fell below the poverty line in the second half of 2010 due to high and volatile prices, and research for Oxfam’s GROW campaign indicates that the price of staple foods such as maize could more than double in the next 20 years - up to half of this increase is due to climate change.  

Jean-Cyril Dagorn, policy advisor for Oxfam’s GROW campaign said:

“Putting the global food price crisis at the top of the G20’s political agenda was a welcome move, but high expectations that politicians were finally starting to take the record spike in food prices seriously were crushed in Paris.”

“Fixing the global food system and ending the food price crisis requires major surgery, yet the G20 produced little more than a band aid. Agriculture Ministers agreed to address some of the impacts of high and volatile prices but failed to introduce the measures needed to prevent prices from spiraling out of control in the first place.”

“Crossing our fingers and hoping the crisis will go away is simply not good enough when millions of people are going hungry because of high and volatile food prices. Only by coming to grips with the problems - reforming flawed biofuels policies that divert food into fuel and helping poor countries build up buffer stocks to cope with extremes in food price volatility – will they solve this problem.”

“This is not the end of the road.  G20 Finance Ministers could still address excessive speculation when they meet in July, the G20 Heads of State still have an opportunity to match bold rhetoric with bold action when they meet in November, and the Committee on Food Security – the only truly global body responsible for tackling hunger - will meet in October to address these issues. Governments must seize these opportunities to end the global food price crisis.”

ANALYSIS OF THE G20 COMMUNIQUE

Biofuels: Verdict – Poor

There were high hopes that Ministers would tackle flawed biofuels policies after calls for action by the Food and Agriculture Organization, World Bank, International Monetary Fund and others. However, while Ministers agreed to look at the links between biofuels production and food price volatility they failed to take any concrete measures aimed at reforming biofuels policies or adjusting biofuels targets when food supplies are endangered. Countries suspected of blocking progress include the US, Brazil, Canada and France. The US Government’s biofuels laws meant nearly 40 percent of the US corn crop was directed to ethanol production in 2010 - as the second food price crisis in the space of 3 years began to hit.

Food reserves: Verdict – Poor

Agriculture Ministers agreed to look into bolstering emergency reserves which provide food to people in crisis situations. This is a small step forward however this approach only deals with some of the impacts of high and volatile prices and fails to address the causes.  G20 Ministers failed to recognize that strategic food reserves or buffer stocks also have a critical role to play in helping poor countries cope with extreme food price volatility. A global grain reserve of just 105 million tons would have been enough to help avoid the food price crisis in 2007-8.  The cost of maintaining this reserve would have been $1.5 billion; or just $10 for each of the 150 million additional hungry people that may have been avoided.

This is the top priority for the French Presidency. The G20 Agriculture Ministers agreed to explore the links between speculation and food price volatility and to look at mechanisms for regulating excessive speculation on the commodity markets.  This is an issue which Finance Ministers will take up when they meet in July.

Transparency: Verdict – Pass

Agriculture Ministers agreed to set up system to provide information on agricultural production and food stocks held by countries around the world. This will help ensure countries and the international community have some of the information they need to analyze the global food situation and take action to avert a crisis. Unfortunately, Ministers stopped short of requiring agribusinesses – which dominate the trade in many staple foods– to disclose information on the stocks they hold.  According to one estimate Cargill, Bunge, and ADM control nearly 90 percent of global grain trading between them.

Insurance Mechanisms:  Verdict - Poor

France pushed forward market based proposals for hedging instruments that would enable vulnerable countries to insure themselves against future food price shocks.  Because the proposals fail to address the causes of price volatility, they are unlikely to succeed.   Without action to regulate and increase the transparency of global commodity and futures markets, the measures are more likely to benefit the financial institutions that provide the insurance rather than poor food insecure countries that are purchasing it.  In addition, poor smallholders will not be able to access these mechanisms. Oxfam believes resources would be better directed at other instruments to manage risk, such as buffer stocks.

Investment in agriculture: Verdict – Fail

Agriculture Ministers agreed that more investment is needed in agriculture. However, they focused on the need to support private investment in agriculture, rather than agreeing on concrete measures to support poor producers in developing countries.  Small-scale food producers offer the greatest potential to sustainably increase global agricultural yields and tackle hunger. Investing in women farmers could raise total agricultural output in developing countries by 2.5 to 4 percent.  

Climate change: Verdict - Fail

Rich counties failed to even acknowledge that climate change is a major cause of food price volatility. Climate change is estimated to have increased the amount we spend on food worldwide by $50 billion a year.

In a new joint report released today, the two organizations outlined how climate change will likely decrease agricultural output, displace populations from coastlines, change access to water resources, and increase the frequency of disease outbreaks, leading to increased need for humanitarian assistance, often with serious security implications.

“Climate change will likely bring about more disasters, greater economic stress and increased migration, which can exacerbate instability, particularly in already fragile states,” said Dr. E.D. McGrady, Research Analyst with CNA and co-author of the report.

South Asia and sub-Saharan Africa, the regions most likely to experience food and water insecurity as a consequence of climate change, are also home to a number of ongoing conflicts. Societies that lack the resources to adapt to these changes may suffer significant decreases in overall economic output, potentially increasing the likelihood of local or regional conflict.

“Building resilience and reducing vulnerabilities are key and cost-effective ways to lower future resource demands,” said Dr. Marc Cohen, Senior Researcher with Oxfam America and co-author of the report.
“Numerous analyses also show the economic benefits of strategies focused on reducing the risks from disasters, with a ‘return on investment’ much less than for reactive humanitarian assistance.”

Nevertheless, between 1999 and 2008, just 0.4% of total global development assistance supported disaster prevention and preparedness, according to the report. Current U.S. government institutional and budgetary arrangements do not adequately support resilience building and disaster prevention.

“Climate change is happening now and we must make the necessary investments to address its impacts,” said Vice Admiral Lee Gunn, USN (Ret.), President of CNA’s Institute for Public Research and Vice Chairman of the CNA Military Advisory Board. “Such investments now would significantly reduce long-term costs of humanitarian response, limit strains on our military and civilian capacity, and lay a stronger foundation for stability in developing countries.”

“To handle the coming storm, the US. must create a coherent, whole-of-government approach to disaster response and planning, led by the civilian agencies – especially the Office of Foreign Disaster Assistance – that have the greatest expertise in tackling these challenges,” said  Paul O'Brien, Vice President for Policy and Campaigns with Oxfam America.

The report is available here.

In a new briefing paper launched ahead of the meeting, Oxfam also urged the G20 to reconsider the case for food reserves so that countries can better handle the humanitarian needs that accompany price spikes that left an extra 150 million people hungry during the last food price crisis. Many poor people continue to struggle with rising food prices (see sidebar below). An early draft of the G20 communiqué leaked last week did not go far enough in tackling the problems.

“Secretary Vilsack should lead the way in Paris to address the root causes of food insecurity and price volatility,” said Oxfam’s GROW campaign manager, Vicky Rateau. “The measures so far offered by the US are insufficient to face the challenges of rising hunger and poverty, increased price volatility and climate change. Agriculture Secretaries do not usually get the chance to play a leading role in tackling global problems, but this can be Secretary Vilsack’s moment to do exactly that."

A recent expert report from ten major international institutions including the World Bank, the UN FAO and OECD on price volatility in the G20 made it crystal clear that biofuels were part of the problem. The US and other G20 countries must urgently remove the types of biofuels subsidies and mandates that are leading to increased price volatility and failing to tackle climate change.  

“Recent votes in both chambers of congress show  strong bipartisan support to cut back on taxpayer funded giveaways to the ethanol industry” continued Rateau. “Secretary Vilsack should support these adjustments in the light of tightened food supplies and high prices.”

The Oxfam report also urges the G20 to require major private sector traders and investors to provide governments with adequate and timely information on their food stocks in order to improve market transparency. The briefing paper points to evidence from countries like Madagascar and Indonesia that show that properly designed food reserves combined with other measures could help developing countries to tackle food price volatility.

Oxfam’s call comes with a warning that global grain stocks are again falling to alarmingly low levels. In the past when global cereal stocks fall below 15-20% of world consumption, price hikes and market break-down have followed. By the end of this year, Oxfam says, this ratio could be as low as 17%.    

A global grain reserve of just 105 million tons would have been enough to help avoid the food price crisis in 2007-8, Oxfam’s research shows. The cost of maintaining this reserve would have been $1.5 billion; or just $10 for each of the 150 million additional hungry people that may have been avoided. India managed to stabilize food prices in 2008 because the government made a significant purchase and release of rice and wheat.

“It is abundantly clear that high and erratic food prices are a major risk for everyone, but especially for the poorest people who spend a large portion of their income on food,” said Gawain Kripke, Research and Policy Director for Oxfam America.  “Food reserves were largely dismantled in the 1990s and have been ignored ever since.  There are smart new ways that vulnerable countries can maintain sufficient food reserves as part of a bundle of policies that could work to limit price surges. We’ve already seen the huge human cost of countries not having food reserves.”

Oxfam’s report shows that in some cases food reserves may have been poorly managed in the past but that did not mean the policy itself was wrong – rather, it meant that the reserves themselves needed to be better implemented and governed.

Oxfam says that the US and other G20 governments should support national and regional food reserves in developing countries and buffer stocks managed in a durable, transparent manner. The G20 should commit technical and financial resources to establish these reserves and encourage other governments to do so.

/ENDS

“Business can only thrive in stable and enabling environments,” said Georg Kell, Executive Director of the UN Global Compact. “Climate adaptation offers a pathway to help communities that are already feeling the devastating impacts of climate change. At the same time, it creates a wealth of new opportunities for the private sector.”

Drawing on the results of a 2010 survey among companies engaged in Caring for Climate, the joint climate action platform of the UN Global Compact and UNEP, the study makes the business case for private sector adaptation to climate change in ways that build the resilience of vulnerable communities in developing countries. Already, businesses worldwide are beginning to see the risks and economic impacts of more frequent and intense storms, water scarcity, declining agricultural productivity and poor health. 

Achim Steiner, UN Under-Secretary General and UNEP Executive Director, said: “We live in a world where extreme weather events on one day can move food and fuel prices the next, impacting vulnerable and poor communities and a company’s supply chain. We also live in a world where infrastructure established decades ago will become increasingly at risk to events such as storm surges and high winds, that in turn threaten the viability of the business-as-usual models of the past, and the profits or losses of firms for the future.”

“There are multiple reasons why the world urgently needs a transition to a low-carbon, resource efficient Green Economy, including climate change and adapting to its impacts. This report underlines that climate-proofing is not just a responsibility of governments, but should be at the centre of more and more companies’ business models and forward-looking corporate strategies," he added.

The study suggests actions that companies and policymakers can pursue to catalyze and scale up private sector engagement. Confirming the notion that the climate threats many communities face are also business risks, 83 percent of companies surveyed responded that climate change impacts pose a risk to their products and service.

“Businesses are facing increasing challenges from the rise in extreme weather events— such as droughts, heat waves and floods,” said Manish Bapna, Managing Director, World Resources Institute. “In this changing environment, companies that move first to address the risks and develop innovative strategies to adapt to climate change are likely to be the winners and gain a competitive advantage moving forward.”

The study recommends, among others, that businesses integrate climate adaptation into core strategic planning and build a portfolio of climate-resilient goods and services. Addressing policy makers, the authors call for stronger policy and finance commitments to adaptation, financial and risk-reduction incentives to stimulate the market, and for new forms of public-private partnerships.

“Communities around the world are already dealing with the impacts of climate change,” said Raymond C. Offenheiser, President of Oxfam America. “Since companies depend on community members as suppliers, customers and employees, and need to count on local services and infrastructure to be able to operate efficiently, the well-being of communities on the frontlines of climate change and the viability of companies are intricately intertwined.”

 To read the report, go here.

• 54% of people questioned globally and 56% in the US said they are not eating the same food as they did two years ago.  Globally 39% of people said their diet had changed because food is becoming too expensive and 33% cited health reasons.   In the US 31% of people cited the cost of food and 49% cited health reasons.
• The rising cost of food was by far the biggest food worry with 73% of Americans and 66% of people globally citing it as one of their top concerns.  43% of people in the US and globally said that the healthiness or nutritional value of the food they and their families ate was also a key concern.
• In poorer countries the availability of food was a much bigger concern with 57% of people in Kenya and 45% of people in Tanzania saying it was one of their top concerns.
• 8% of Americans surveyed said that they sometimes, rarely or never had enough to eat on a daily basis.  This is compared to one in five people surveyed in developing countries such as Pakistan, Kenya, Ghana, Mexico, India, and Guatemala, who said that they sometimes, rarely or never had enough to eat on daily basis.  In very poor countries such as Tanzania and Kenya up to 21% of people said they rarely or never had enough to eat.  
• Rising oil and transport costs and the impact of extreme and erratic weather were most frequently mentioned by Americans as the main factors affecting food supply.
• Pizza is the most popular food in the US, with 15% of Americans listing it as their favorite followed by steak, chicken and Mexican food.
  

The survey of over 16,000 people, conducted by international research consultancy GlobeScan, also revealed how globalization is changing what people eat with pizza and pasta topping the list of favorite foods in many countries alongside national dishes. But the results also show the enduring importance to people around the world of staples like rice and wheat in the global food system, and of national cuisines in many countries.

“The consequences of the world-wide rise in food prices are very apparent in these survey results,” said Oliver Martin, Research Director of GlobeScan.  “The cost of food is by some distance the dominant concern that people have about what they and their family eat.”

Additional interviews conducted by Oxfam provide further evidence that many people in developing countries are either eating less food, eating cheaper items or enjoying less diversity in their diets as a result of rising food prices.  Women tend to be disproportionately affected by rising food prices because they are responsible for feeding their families. 

Glenda Marisela Galindo Castro, a 22 year old shop assistant from Guatemala said: Sugar used to be the most important thing for us.  We added it to our coffee and to soft drinks but now we can’t because the price of sugar has gone up. Oil which used to cost 5 quetzals for half a liter now costs 8.  I’m the only one who works and the wages I earn are not enough to cover my families’ needs. 

Edson James Kamba, aged 69, from Malawi said: “My favorite food is rice with beans and meat but it is very expensive. The price of food keeps going up. I would like some milk to drink but I can’t buy it. I used to have margarine and jam with bread but now I can’t afford it. When I see people on TV they are always eating very good things like meat, chicken and eggs. If I was there I would have those things. We want it but we can’t afford it.”

Oxfam’s GROW campaign is starting a global conversation on how we can grow and share food better now and in the future. High profile people involved in the debate include former President Lula of Brazil, Archbishop Desmond Tutu, musician Angelique Kidjo from Benin and actors Gael Garcia Bernal from Mexico, Amr Waked from Egypt and Hai Qing from China and author Frances Moore Lappe from the US. 

“The tragedy is that anxiety over food prices is soaring at a time of overall strong global harvests,” said Frances Moore Lappé author and Oxfam Sister on the Planet. “What’s sadly missed is some great news—that the hungriest people are actually part of the solution to both hunger and climate change. Millions of small farmers worldwide are proving they can increase yields using ecological practices and at the same time store more carbon compared to chemical farming.”

“Food is one of life’s greatest pleasures and one of our most basic human rights,” said Offenheiser.  “It’s important we all get involved in the debate about how to change the global food system so everyone has enough to eat today and in the future. Oxfam’s Grow campaign is inviting people to join the debate now at www.oxfamamerica.org.”

For more information go to: www.oxfamamerica.org/grow

The new report, ‘Growing a Better Future’, was released as part of Oxfam’s new global GROW campaign launching on June 1st, to address the increasing pressures on our food system, including extremely volatile food prices, which have pushed an estimated 44 million people into poverty in the last year. The report warns that spiraling prices and endless cycles of regional food crises will create millions more hungry people unless we transform the way we grow and sell food.

“We are fighting both sides of the war on hunger,” said Raymond C. Offenheiser, President of Oxfam America. “US policies are making it more difficult for the small farmers, who grow much of the world’s food, to have enough to feed their own families.  With sensible reforms to increase productivity and resilience of small farmers around the world, we can GROW a better future that holds greater economic prosperity, national security, and a more stable food supply for everyone for generations to come.”

Oxfam’s GROW campaign is backed by high profile supporters including former President Lula of Brazil and Archbishop Emeritus Tutu.

"We can't wait anymore,” said Former President Lula of Brazil. “Political leaders and global companies must act now to ensure that all people can put food on their table. There are no excuses. We have the capacity to feed everyone on the planet now and in the future. If the political will is there no one will be denied their fundamental human right to be free from hunger.

The new report catalogs the symptoms of today’s broken food system, including growing hunger, flat-lining yields, a scramble for fertile land and water and rising food prices. It warns we have entered a new age of crisis where depletion of the earth’s natural resources and increasingly severe climate change impacts will create millions more hungry people.

Eight million people, a great majority women and girls, face chronic food shortages in East Africa today, while local and regional crises could see demand for food aid double in the next 10 years. Oxfam estimates that by 2050 demand for food will rise 70 percent yet our capacity to increase food production is declining. The average growth rate in agricultural yields has almost halved since 1990 and is set to decline to a fraction of one percent in the next decade.

Oxfam’s GROW campaign seeks to expose the failed policies that are propping up the broken food system and fight for common sense solutions:

CHALLENGES

• Traders: Four global companies control the movement of most of the world’s food. Three companies - Archer Daniels Midland, Bunge and Cargill – control an estimated 90 percent of the world’s grain trade. Their activities help drive volatile food prices and they profit from them. In the first quarter of 2008, at the height of a global food price crisis, Cargill’s profits were up 86 percent and the company is now heading for its most profitable year yet on the back of further disruptions to global food supplies.
• India: Despite doubling the size of it economy between 1990 and 2005 the number of hungry people in India increased by 65 million - more than the population of France - because economic development excluded the rural poor and social protection schemes failed to reach them. Today one in four of the world’s hungry people live in India.
• United States: US policy ensures 15 percent of the world’s corn crop is diverted to engines, even at times of severe food crisis. The grain required to fill the gas tank of an SUV with biofuels is enough to feed one person for a full year.

SOLUTIONS

Oxfam America released a 5-point plan of urgent actions to address an imminent food crisis. The plan calls for President Obama, the US Congress and the private sector to take immediate steps to reduce the pressure on the US economy, consumers and poor people around the world by:

1. Investing in Small-Scale Food Producers
2. Ending Excessive Speculation in Agricultural Commodities
3. Modernizing Food Aid
4. Stopping Giveaways to the Corn-Ethanol Industry
5. Regulating Land and Water Grabs

“This is an emergency and President Obama and other powerful actors in Congress and the private sector should treat it like one,” said Offenheiser. “We can no longer afford for the priorities of a few lobbyists to trump the interests of the American public and the billions who go hungry. We can end this age of crisis and put our country and the world on track towards a new age of prosperity.”

Oxfam global ambassador Djimon Hounsou said, “I am joining Oxfam’s GROW campaign because we have the power to change our future. Hunger is a man made challenge with practical solutions.  If we work together we can build a better world where mothers don’t have to go hungry so their children can eat.”

Archbishop Desmond Tutu said, "Many governments and companies will be resistant to change through habit, ideology or the pursuit of profit. It is up to us – you and me – to persuade them by choosing food that’s produced fairly and sustainably, by cutting our carbon footprints and by joining with Oxfam and others to demand change.”

Notes to editors:
The report can be found at: http://www.oxfamamerica.org/publications/growing-a-better-future