The massive rise in the price of wheat and rice is forcing the Canadian Foodgrains Bank to say no to drought-stricken Ethiopia.
“We are receiving significant requests to provide food (for Ethiopia),” foodgrains bank executive director Jim Cornelius wrote in an e-mail to The Western Producer.
“We are having to tell our long standing partners in Ethiopia that we cannot afford the amount of grain they are requesting.”
Cornelius, who was in Rome for meetings with other aid agencies, said the substantial rise in prices is severely undermining the foodgrains bank’s work.
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He estimates it will reduce the amount of food it can distribute this year “by at least 25 percent and probably much more.”
The funding shortfall prompted the bank to release a statement April 16 asking its donors and the Canadian government for $5 million in support. The money will allow the bank to maintain its current levels of programming.
The foodgrains bank is not alone in its struggles.
The United Nations’ World Food Program recently appealed for an additional $500 million in emergency funding to meet its commitments.
Cornelius said the record high prices are pressuring the agency to choose one country over another.
Heather Plett, the bank’s resource director, used a project in southeast Asia as an example.
She recently returned to Winnipeg from Bangladesh, where a cyclone last November destroyed thousands of homes and killed 2,800 people.
The foodgrains bank helped provide food for 10,000 families in the region and continues to support communities hammered by the storm.
“While I was there, an elder in the community pulled me aside and said, ‘we appreciate what you’ve sent us, but it’s not enough. We’re still hungry,’ ” Plett said.
However, the rapid increase in rice prices from $10 US per pound at the Chicago Board of Trade last August to $20 today has doubled the bank’s Bangladesh budget.
As a result, the increased costs limit how the bank can respond to a new crisis, such as the one in Ethiopia.
“In the past, when prices were lower, we would have been fully able to respond to these requests,” Cornelius said.
Ethiopia has received only minimal precipitation during the short rainy season from October to December.
When asked to speculate on possible solutions to the problem, Cornelius said extra funding is a short-term fix.
Another immediate solution is to reduce the cost of buying and transporting grain by buying it from countries near the area of need, but the Canadian International Development Agency requires that 50 percent of the foodgrains bank’s foreign donations come from Canada.
However, Plett said the federal government is considering eliminating the stipulation. If it were changed, it would free up the foodgrains bank to buy food from the cheapest and most convenient source.
Cornelius said over the long term western democracies need to increase financial support to improve farms and crop production in developing countries.
Investments in extension services, roads and market development would help small-scale farmers.
In a document released April 16, the foodgrains bank provided reasons why food prices are going up. They pointed to the obvious – biofuel subsidies and growing world demand for meat – but also singled out commodity funds.
“The rapid changes in cereal and oilseed prices have drawn the attention of the financial markets, which are particularly interested in anything whose price is changing rapidly,” wrote Stuart Clark of the foodgrains bank.
“This price volatility offers a chance to make huge short-term profits.”
