Food Prices Uganda - The World Bank Group has announced that it is providing an initial $4 billion risk management fund in a measure aimed at providing protection from volatile food prices to farmers, food producers, and consumers in developing countries. Developing countries are increasingly facing difficulties regarding the rising food prices, a situation which has seen millions of people being pushed into poverty. The World Bank says this first-of-its-kind product will improve access to hedging instruments to shield consumers and producers of agricultural commodities from price volatility, which has been marked by sharp increases over the past 12 months. The resource will also protect buyers from price rises in food-related commodities such as wheat, sugar, cocoa, milk, live cattle, corn, soybean, and rice.

"With this new tool, we can help farmers, food producers, and consumers protect themselves against price swings, strengthen their credit position, and increase their access to finance," said World Bank Group President Robert B. Zoellick.

Mr Zoellick added: "This tool shows what sensible financial engineering can do: make lives better for the poor."

Agriculture ministers from the Group of 20 nations were scheduled to meet in Paris, in an attempt to tackle volatile food prices putting millions of lives in danger.

Mr Zoellick said aside from promoting the use of risk management instruments, the G20 agriculture ministers could take a major step forward this week to address high and volatile food prices by agreeing to improve transparency in agriculture, with an information system to increase public access to information on the quality and quantity of grain stocks.

Mr Zoellick who was speaking Washington DC on June 21 ahead of the G20 Agriculture ministers said he was also hopeful the G20 agriculture ministers would take the first steps in agreeing to exempt humanitarian food aid from export bans, so food aid can get to hungry people in time to save lives.

"We have been in a period of extraordinary volatility in food prices, which poses a real danger of irreparable harm to the most vulnerable nations and people.

High, uncertain and volatile food prices are the single gravest threat facing the most vulnerable in the developing world. People are hungry for food and for action on a global level," said Mr Zoellick.

Mr Zoellick said greater transparency on food stocks around the globe sends a powerful signal and would help reduce food price volatility by reassuring markets and helping calm panic induced price spikes.

He further said the stresses on the world's agricultural system - compounded by growing demand for food - were evident in the numbers.

Annual growth in rice and wheat yields in developing countries - home to four fifths of the world's population - has dropped from three per cent in the 1970s to just one per cent today.

He also warned that agriculture was under threat by climate change and without strong adaptation measures; climate change could reduce yields by 16 per cent worldwide and 28 per cent in Africa alone over the coming half century.

Martin Luther Oketch

The Monitor/28/06/2011