World hunger, the crisis inside the economic crisis

As food prices skyrocket, the jobs and wages of the poorest are being devastated. But will the developed world act when it's focused on averting a financial meltdown?

By Sonni Efron
March 12, 2009

The economic crisis has now spread from Wall Street to Main Street to the places where there are no streets.

In slums and shacks around the world, hunger is gnawing again as job opportunities shrink but food prices do not. Global cereal prices are 71% higher than they were in 2005, according to the International Monetary Fund, but the wages of many workers are falling.

This is a disaster for the bottom billion, the one out of six humans living on less than $2 a day. But as always, the poor have a problem getting our attention -- especially when the rich have lost half their wealth.

Today's attention deficit is this: Starving children with bloated bellies make for horrific video footage, and the world opens its wallet. But chronic malnutrition, degradation and misery -- suffering that causes real pain but falls short of mass famine -- is being pushed off the front pages by the frightening global economic news.

Last year, skyrocketing food prices sparked violent protests in 30 countries and scared many more into making generous donations. The United States doubled its contribution to the U.N. World Food Program. Saudi Arabia handed over a check for $500 million. All told, the world kicked in an extra $2.3 billion. As a result, the U.N. program was able to add 30 million people to the rolls of those being fed, and disaster was averted.

But it was a short-term fix. The chronic, underlying causes of food insecurity haven't been addressed. So warnings that hunger is growing again should come as no surprise.

What is perplexing is that on the global market, prices of such food commodities as maize, wheat and rice have fallen by 35% to 50% in the last year (although they are still 50% higher than in 2005, according to the International Monetary Fund). Oil prices have collapsed too. Yet the price of food at the retail level around the world shows no signs of falling.

How can this be? The causes are myriad: pricing lags, hoarding, speculation, war, profiteering, food export controls, droughts in China and Argentina, and the age-old reluctance to lower prices, which economists call "stickiness."

As usual, in the poorest places the situation is stickiest.

In Afghanistan, a standard food basket cost 73% more in October than it did a year earlier. In February, the charity Mercy Corps found that Afghan families were skipping meals, eating boiled turnips instead of bread and pulling their boys out of school to shine shoes in the market. One family married off a young daughter even earlier than planned to collect the wedding gift from the groom's family -- $160.

In Tajikistan, more than a third of the nation's gross domestic product comes from remittances sent home from migrant workers in Russia, according to the World Bank. As the global economic crisis and the fall in oil prices ravage Russia, those workers are being fired. This also has become a problem in remittance-dependent Haiti, Jordan and Kyrgyzstan -- three countries where instability could create bad political problems for their neighbors.

In Zambia, whenever the world price of copper declines, unemployment rises. Copper mined there is exported for use in the production of computers, refrigerators, autos and machinery, and slumping industrial demand caused the price of copper to plummet 54% last year. That means more hunger in Zambia, where nearly half of all children under 5 have stunted growth.

World Bank President Robert B. Zoellick has called for the developed countries to set aside 0.7% of stimulus funds for vulnerable countries. This is sensible: It's always far cheaper to prevent hunger, increase production and position food stocks where famines may loom than it is to buy food on the open market during panics, when prices jump. But how much is the developed world willing to invest in foreign food security when its governments are running up record deficits to stimulate their own economies?

The World Food Program says it will need $6 billion this year, $1 billion more than in 2008. So far, it's only raised 10% of that. Of course, it will take vastly more -- and more than money -- to fix the long-term problems that create hunger: under-investment in agriculture and food infrastructure, particularly in Africa; urban development on farmland; and climate change, which will make all of the problems worse.

And then there's the unchecked population growth that eats up whatever gains many poor countries manage to make.

If the Group of 20 leading and developing nations meeting in London this weekend pushes the food problem to the back burner to focus only on financial stabilization, the annual begging for emergency food aid -- the most expensive, least sustainable form of foreign aid -- will never end. And neither will the suffering.