Africa needs farm investment to absorb food prices
Monday, 5 November 2007
DAKAR, Nov 4 (Reuters): Africa needs more investment in farming to cope with soaring food prices due in part to growing biofuel production in the West, but it could profit from rising demand for alternative energy, an IMF official said.
The explosion of biofuels production from food crops, subsidised by some Western countries as a less environmentally damaging alternative to fossil fuels, has contributed to a surge in food prices with grains and other crops at record highs.
"The priorities for Africa are adapting to this new situation," Charles Collyns, deputy director of the International Monetary Fund research department, told Reuters.
"The reality is that food prices are going to be higher going forward than they have been in the past. This creates both problems and opportunities," he said.
Collyns was speaking after presenting the IMF's regional economic outlook to government officials and civil society representatives in Senegal's capital Dakar, several of whom expressed concern over rising food prices in Africa despite generally benign economic fundamentals. "These problems are not given adequate attention in the West, but when one comes to Senegal and one visits Africa then it becomes very clear that this is a major issue," he said.
Besides demand from the biofuels industry, record high oil prices were also driving up food costs due to transport and other related costs, and this was hitting consumers in poor countries the hardest, he said.
African governments should focus more on developing farming, which not only provides food but helps improve incomes in rural areas where many of Africa's poor live, Collyns said.
"It's important to build up infrastructure, to build up institutions to allow these people to participate in the global economy, to take benefit from the higher prices that are coming from agricultural goods to produce new products, both for domestic consumption but also for export," he said.
Collyns criticised Western governments who subsidise biofuels production, saying some operations did not significantly reduce emissions of greenhouse gases, and hurt poor countries by contributing to food price rises.
"In the IMF we are also worried about the impacts of policies to produce biofuels. A third of the increased demand for grains in recent years is coming from the use of grains for biofuels," he told delegates.
"This is very inefficient because in fact there are other ways of producing biofuels ... using lower-tier agricultural crops," he said.
The explosion of biofuels production from food crops, subsidised by some Western countries as a less environmentally damaging alternative to fossil fuels, has contributed to a surge in food prices with grains and other crops at record highs.
"The priorities for Africa are adapting to this new situation," Charles Collyns, deputy director of the International Monetary Fund research department, told Reuters.
"The reality is that food prices are going to be higher going forward than they have been in the past. This creates both problems and opportunities," he said.
Collyns was speaking after presenting the IMF's regional economic outlook to government officials and civil society representatives in Senegal's capital Dakar, several of whom expressed concern over rising food prices in Africa despite generally benign economic fundamentals. "These problems are not given adequate attention in the West, but when one comes to Senegal and one visits Africa then it becomes very clear that this is a major issue," he said.
Besides demand from the biofuels industry, record high oil prices were also driving up food costs due to transport and other related costs, and this was hitting consumers in poor countries the hardest, he said.
African governments should focus more on developing farming, which not only provides food but helps improve incomes in rural areas where many of Africa's poor live, Collyns said.
"It's important to build up infrastructure, to build up institutions to allow these people to participate in the global economy, to take benefit from the higher prices that are coming from agricultural goods to produce new products, both for domestic consumption but also for export," he said.
Collyns criticised Western governments who subsidise biofuels production, saying some operations did not significantly reduce emissions of greenhouse gases, and hurt poor countries by contributing to food price rises.
"In the IMF we are also worried about the impacts of policies to produce biofuels. A third of the increased demand for grains in recent years is coming from the use of grains for biofuels," he told delegates.
"This is very inefficient because in fact there are other ways of producing biofuels ... using lower-tier agricultural crops," he said.