World food prices put Latin America against the ropes

April 20th, 2008 - 9:25 am ICT by admin  

By Veronica Sardon
Buenos Aires, April 20 (DPA) The impact of rising food prices on world markets is already putting Latin America against the ropes: as regional giant Brazil insists its focus on biofuels has nothing to do with the price increases, Mexico is bracing itself for a hard time, and others are dealing with riots. “Don’t come tell me that (food) is expensive because of biodiesel,” Brazilian President Luiz Inacio Lula da Silva said this week. In the South American nation, the alternative to petrol is made from sugar.

“It is expensive because the world was not ready to see millions of Chinese eat, millions of Indians, Brazilians and Latin Americans eat three times a day,” Lula said in a speech before the opening session of the 30th Regional Conference for Latin America and the Caribbean of the UN Food and Agriculture Organisation (FAO).

Whether or not biofuels are behind the relative scarcity of foodstuffs and pushing up prices on world markets, World Bank President Robert Zoellick noted last week that climbing food prices would set back efforts to reduce poverty by about seven years.

Latin America - a region with some 190 million poor - is having to deal with the effects of the price increases, and it is not proving easy.

In Haiti - the poorest country in the Americas, where 80 percent of its nine million people are living on less than $2 a day - the Senate sacked the prime minister last week, after riots over the rise in food prices claimed the lives of at least five people.

In Honduras, a net importer of foodstuffs, scores of thousands of people - including workers, teachers, students and peasants - marched this week against rising prices, and several people were injured in the resulting clashes.

“The food problem can put an end to progress and stability,” warned Hedi Annabi, head of the UN Stabilization Mission in Haiti (MINUSTAH).

The leaders of Central America, the Caribbean, Mexico and Venezuela appear to agree with him, and they have arranged to meet to discuss the issue May 7 in Nicaragua.

The foreign ministers of Nicaragua and the Dominican Republic said this week that the gathering would seek to devise a regional strategy that allows for an improvement in the production and distribution of foodstuffs at fair prices.

Individually too, countries across the region are adopting measures to prevent further trouble.

The Mexican government has announced plans to try to keep relatively constant at least the local price of corn, which is a staple of the Mexican diet. In the face of increases in the price of rice, beans and wheat, among others, Agriculture Minister Alberto Cardenas said the production of white corn has been increased since 2007.

Experts, however, have noted that the government cannot stop price increases, and they have expressed fears that in Mexico these may lead to social turmoil.

Peruvian authorities have started handing out food in poor areas of Lima, and President Alan Garcia said the aim of the move is to “compensate” the impact of global price movements that the government cannot act upon directly.

Honduras launched an ambitious $105 million plan for the reactivation of farming, seeking an increase in the local production of grain.

Argentina, a prime exporter of foodstuffs, is having great trouble keeping domestic prices down and keeping the domestic market suitably supplied, as local producers seek greater benefits by selling their produce abroad.

Argentine Finance Minister Martin Lousteau noted that the rise in commodity prices will have a greater impact on poorer countries, and based not just on their income but rather on the make-up of their diet.

In the face of current price increases, most people in the region agree that Latin America will have to produce more foodstuffs rather than import them.

However, it remains to be seen whether net importers, like Honduras or Guatemala, can rise to the challenge, and whether net exporters, like Argentina or Chile, can stand by their many poor in the face of the attractions of selling abroad.

“History is full of wars that began because of events like this,” Dominique Strauss-Kahn, head of the International Monetary Fund, warned in no uncertain terms last week.

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