Financial crash could deepen food crisis: FAO Director-General

ROME, Oct. 15 (Xinhua) -- Governments should not cut aid to agriculture in developing countries and avoid bringing in protectionist trade measures in response to the unfolding global financial crisis, FAO Director-General Jacques Diouf warned Wednesday.

In a speech at the 34th Session of FAO's Committee on World Food Security (CFS) from Oct. 14-17, Diouf warned that such steps could increase the risk of another food crisis occurring next year,saying that it could happen despite the record 2008 cereal harvestwhich is now expected.

According to the latest issue of FAO's Crop Prospects and Food Situation report, cereal production is forecast to increase 4.9 percent to a record 2. 23 billion tons in 2008.

Meanwhile, some 36 countries around the world are still in needof external assistance as a result of crop failures, conflict or insecurity, or continuing local high prices, the report noted.

The great uncertainty now enveloping international markets and the threat of global recession may tempt countries toward protectionism and toward reassessing their commitments to international development aid, Diouf said.

"It would be unfortunate if this were to be the case and the recently mobilized political will towards enhanced international support for developing country agriculture were to evaporate," he added.

Diouf noted that the financial crisis, following hard on the heels of the soaring food price crisis which threw an additional 75 million people into hunger and poverty in 2007 alone, may well deepen the plight of the poor in developing countries.

Commodity prices are currently dropping, mainly on expectation of favourable crop prospects but also because of a slowing world economy, among other factors.

This could mean a cutback in planting followed by reduced harvests in major exporting countries. Given continuing low grainsstocks, this scenario could lead to another turn of record food prices next year -- a catastrophe for millions who by then would be left with little money and no credit.

The impact of the financial crisis may also be felt in developing countries at the macro level, with further potentially negative effects on agriculture and food security, Diouf said.

"Borrowing, bank lending, official development aid, foreign direct investment and workers' remittances, -- all may be compromised by a deepening financial crisis," he noted.

Diouf recalled that governments and world leaders agreed at an FAO High-Level Conference on World Food Security held last June that "the international community needs to take urgent and coordinated action to combat the negative impacts of soaring food prices on the world's most vulnerable countries and populations."

A G8 Summit in Japan a month later confirmed the resolve of world leaders to address global food security as a top priority and demonstrated a growing political will to reverse disturbing trends in global hunger, he noted.

"It is vital that this momentum be maintained," Diouf said. "Unless political will and donor pledges are turned into real and immediate action, millions more may fall into deeper poverty and chronic hunger."

"The global financial crisis should not make us forget the foodcrisis. Agriculture needs urgent and sustained attention too to make hunger and rural poverty part of history," he added.