G8 agriculture ministers try to halt 'spiral of hunger' created by drought, falling prices and credit crunch

by Geoffrey Lean

Agriculture ministers from the world's richest countries are holding an unprecedented meeting this weekend as the United Nations warns that hunger threatens to "spiral out of control" in the wake of the financial crisis.

The three-day meeting, which opened in Italy yesterday, will address a growing food crisis as harvests threaten to slump at a time when record numbers of people are already hungry. Crops are being hit by a combination of bad weather, falling food prices and farmers' being refused credit to buy seeds and fertilisers.

It is the first time that the agriculture ministers of the G8 leading economies have held such a meeting, and they have invited their counterparts from China, India, Brazil, Mexico, South Africa, Australia, Argentina and Egypt to join them in Treviso "to work out a common route to lead us out of the crisis and respond to the world food emergency".

The UN's World Food Programme warned: "As the global financial crisis deepens, hunger and malnutrition are likely to increase as incomes fall and unemployment rises. The world is at a critical juncture where we risk watching hunger spiral out of control. We cannot afford to lose the next generation."

The crisis began even before the start of the credit crunch, at a time of record harvests. About two years ago food prices started to rise abruptly, despite the bumper crops, mainly because of the increased use of corn to make biofuel, particularly in the US, and increasing meat consumption – which mops up grain supplies to feed livestock – by the rising middle classes in developing countries such as India and China. Prices of wheat and corn doubled in a year – and rice more than trebled – leading to the first steep and sustained rise in hunger in decades.

A record crop last year did not help much. It brought the cost of grain down in rich countries, which saw most of the increased production, but not in developing ones where the poor live, partly because their currencies fell against the dollar in which international prices are set.

Yet it led to farmers in Europe and the US planting less this year because they can expect lower returns at a time when it is harder than ever to get loans. The US Department of Agriculture reported this month that 7 per cent less land is being used to grow wheat, in a country that helps to supply 100 nations around the world.

China – which feeds a fifth of the world's people off just a 10th of its cropland – did increase sowing but, in another cruel twist of fate, was then hit by its worst drought in nearly 70 years, cutting yields by up to 40 per cent. And drought has also led to a similar slump in another of the world's great grain-growing regions, Argentina, Paraguay and southern Brazil.

All this means, says the Food and Agriculture Organisation, that harvests are set to fall his year "in most of the world's major producers". The UN adds that it would cost $6bn (£4bn) to stave off the resulting hunger, which would be "relatively inexpensive compared to the trillion-dollar rescue packages designed to save financial institutions".