WORLD TRADE ORGANIZATION  
ORGANISATION MONDIALE DU COMMERCE  
ORGANIZACIÓN MUNDIAL DEL COMERCIO  G/AG/GEN/76/Add.1 
17 April 2008 
 (08-1809) 
Committee on Agriculture Original:   English/ 
 anglais/  inglés 
 
ANNUAL MONITORING EXERCISE IN RESPECT OF THE FOLLOW-UP TO 
THE MINISTERIAL DECISION ON MEASURES CONCERNING THE POSSIBLE 
NEGATIVE EFFECTS OF THE REFORM PROGRAMME ON LEAST-DEVELOPED 
AND NET FOOD-IMPORTING DEVELOPING COUNTRIES 
 
Addendum
 
 
 Attached is a contribution* by the representative of the World Food Programme (WFP) in the 
framework of the annual monitoring exercise in re spect of the follow-up to the Ministerial Decision on 
Measures Concerning the Possible Negative Effects of the Reform Programme on Least-Developed and 
Net Food-Importing De veloping Countries. 
 
 Comité de l'agriculture  
 
EXERCICE ANNUEL DE SURVEILLANCE DE LA SUITE DONNÉE À LA DÉCISION 
MINISTÉRIELLE SUR LES MESURES CO NCERNANT LES EFFETS NÉGATIFS 
POSSIBLES DU PROGRAMME DE RÉFORME SUR LES PAYS LES MOINS 
AVANCÉS ET LES PAYS EN DÉVELOPPEMENT IMPORTATEURS 
NETS DE PRODUITS ALIMENTAIRES 
 
Addendum
 
  On trouvera ci-joint une contribution
* du représentant du Progra mme Alimentaire Mondial  
(PAM) dans le cadre de l'exercice annuel de survei llance de la suite donnée à la Décision mi nistérielle 
sur les mesures concernant les effe ts négatifs possibles du programme de réforme sur les pays les moins 
avancés et les pays en développement im portateurs nets de pr oduits alimentaires. 
 
 
Comité de Agricultura  
 
EJERCICIO ANUAL DE VIGILANCIA DEL SEGUIMIENTO DE LA DECISIÓN 
MINISTERIAL SOBRE MEDIDAS RELATIVAS A LOS POSIBLES 
EFECTOS NEGATIVOS DEL PROGRAMA DE REFORMA EN 
LOS PAÍSES MENOS ADELANTADOS Y EN LOS PAÍSES 
EN DESARROLLO IMPORTADORES NETOS 
DE PRODUCTOS ALIMENTICIOS 
 
Addendum  
 
 A continuación se adjunta una contribución* del representante del Programa Mundial de 
Alimentos (PMA) en el marco del ejercicio anual de vigilancia del segui miento de la Decisión 
ministerial sobre medidas relativa s a los posibles efectos negativos del programa de reforma en los 
países menos adelantados y en los países en desarr ollo importadores netos de  productos alimenticios. 
                                                      
* In English only./En anglais seulement./En inglés solamente. G/AG/GEN/76/Add.1 
Page 2  
 
   
CONTRIBUTION BY THE REPRESENTATI VE OF THE WORLD FOOD PROGRAMME 
(WPF) 
Rising Food Prices:  Impact on the Hungry
 
 
 
1. Rising food prices, which are affecting millions of people, are rooted in increased energy 
prices, competition between biofuels and food, rising demand from economic growth in emerging 
economies, and increasing climatic shocks such as droughts and floods.  The people hit hardest by this 
combination of factors are those living on the razor's edge of poverty. 
2. As never before, policymakers are being c onfronted by increasingly complex challenges 
occurring simultaneously.  Meanwhile, food reserves ar e at their lowest for 30 years and commodity 
markets extremely volatile, subject to sudden sp ikes and speculation.  The situation has been 
exacerbated by the falling value of the dollar, whic h is the currency in which all major commodities 
are traded. 
3. Skyrocketing prices are hitting the world's poor the hardest – those who already spend 60 per 
cent, sometimes even 80 per cent – of their budget on food.  These groups include the rural landless, 
pastoralists and the majority of small-scale farmers.  But the impact is greatest on the urban poor. 
4. The price rises are producing what we're calling the 'new face of hunger' – people who 
suddenly can no longer afford the food they see on st ore shelves because prices have soared beyond 
their reach.  It is not a matter of availability, as one would see in a drought-like situation.  It is about 
accessibility and it is hitting hard urban populations who are reliant on the markets.  
5. Higher food prices are already causing social unrest  around the world.  Lives were lost earlier 
this month in Haiti this month duri ng several days of unrest.  In recent weeks there have also been 
strikes in Argentina and food riots in Burkina Faso , Côte d'Ivoire, Cameroon, Egypt, Indonesia and 
Senegal.  
6. In developing countries across the world, th e price crunch means that families which may 
have had a bit of money to pay schoo l fees for their children, to go to  clinics when they are sick, or 
take much-needed nourishing food toge ther with anti-retroviral drugs, will suffer as they will cut back 
in these areas.  They will also start cutting meals and substituting less nutritious foods. 
7. As they struggle to cope, we risk seeing a major setback in the Millennium Development 
Goals which the world committed itself to reachi ng by 2015 - the first one being to reduce the 
proportion of hungry people by 2015.  Food is  the foundation for six of the other MDG goals1 - more 
hunger and more suffering today points to a potential erosion of the hard-won progress we have made.  
1. WFP's call to action 
8. On 20 March WFP Executive Director Josette  Sheeran sent a letter to 20 heads of 
government, calling on them to step up and make an emergency allocation to our newly created 
special account to offset the rising costs asso ciated with procuring and delivering food. 
                                                      
1 MDG Goals are: 1) Eradicate extreme poverty and hunger; 2) Achieve univers al primary education; 
3) Promote gender equality and empower women; 4) Reduce child mortality; 5) Improve maternal health; 6) 
Combat HIV/AIDS, malaria and other diseases; 7) Ensu re environmental sustainability; 8) Develop a global 
partnership for development. Food is seen as fundamental for the first seven.  G/AG/GEN/76/Add.1 
 Page 3 
 
 
  9. WFP aims to feed 73 million people in 78 countries in 2008.  In the middle of last year it 
estimated that meeting this goal would cost US$2.9 billion – already a huge sum. But since then WFP's commodity costs alone have gone up by 55 per cent .  
10. Due to increased prices of food and fuel, WFP es timates it will need at least half a billion 
dollars more than it anticipated to meet approved projects in 2008.  That takes WFP's operational 
budget for the year to US$3.4 billion. 
11. And we are only in April - much lies ahead in 2008. There are the natural catastrophes that no 
one can predict and which could devastate hundreds of  thousands of lives.  The people affected will 
look to WFP for help for their survival. 
12. WFP is working to avoid the need to cut rations or to reduce the number of people to be fed in 
2008.  We are doing everything possible to mob ilize world attention and support – through 
governments, the private sector and individuals – to stave off such drastic measures. 
2. The way forward 
13. WFP is working with traditional donor governments, the private sector, foundations and 
academic institutions, as well as governments in benefici ary countries.  This is both to meet the new 
funding needs and to help  provide safety nets for the poorest and most vulnerable.  
14. An urgent expansion of safety nets is neces sary because poor families are already eating less 
food and specifically less nutritious food.  The resulting undernutrition will affect young children in particular – effects that will be felt for years in  the form of longer-term poverty and lower economic 
growth (new IFPRI research shows that kids give n proper nutrition up to the age of two earned 50 per 
cent more wages 30 years later).  
15. Τo gain a better understanding of the situation,  WFP has met with experts from think tanks, 
academic and operational organiza tions and NGOs, the Food and Agriculture Organization, the 
USAID Famine Early Warning System (FEWSNET) , the Overseas Development Institute and the 
International Food Policy Research Institute  
16. While high prices on national and internationa l markets are an opportunity to refocus on 
agriculture and rural development in poor countries , with a particular emphasis on small farmers, 
continued and persistent investment s will be required.  In the shorter term, efforts to protect the 
livelihoods of those suffering the effects from price hikes are a top priority.  
3. Major drivers of high food prices: 
1)  rise in oil and energy prices  which affect the entire value chain of food production, 
from fertilizer to harvesting to storage and delivering; 
 
2)  economic boom  in some developing economies, creating increased demand for 
cereals (i.e. change in diet to include higher valued foods like meat); 
 
3)  weather-related events  meaning bad harvests  e.g. multiple Australia droughts; 
 
4)  competition between food and fuel  - shift to biofuels production leading to market 
speculation, e.g. food prices such as palm oil set at fuel prices. 
 G/AG/GEN/76/Add.1 
Page 4  
 
  4. Useful Stats 
• Of the 5.1 billion people who live in the developing world, 1.2 billion still confront 
the ravages of poverty every day. 
• Approximately 1 billion people still live on less than US$1 a day, the threshold 
defined by the international community as ab solute poverty, below which survival is 
in question. 
• 162 million of those are the 'ultra poor', living on less than 1 dollar a day, and trapped 
in a vicious cycle of hunger and poverty.  
• 854 million people in the world are food insecure while 170 million children are 
undernourished. 
• The world's urban population has grown more than the rural population;  within the 
next three decades, 61 per cent of the world's populace is expected to live in urban areas.  
• While poverty has traditionally been concentr ated in rural areas, the urban share of 
the poor increased from 19 per cent in 1993 to 25 per cent in 2002.  Still, 75 per cent 
of the poor in developing countries continue to live in rural areas. 
• With increased risk of droughts and floods due to rising temperatures, crop-yield 
losses are expected e.g. in more than 40 de veloping countries, mainly in sub-Saharan 
Africa where some experts expect cereal yields  to decline with av erage loses of about 
15 per cent by 2080. 
• By 2025, there will be 1.6 billion more pe ople on the planet, putting even more stress 
on limited resources. 
5. The impact in parts of the world where WFP has operations: 
(a) West Africa 
• High prices of basic commodities in West  Africa are impacting people's purchasing 
power, especially in countries such as Mauritania that depend on imports to feed themselves.  If the prices continue to rise,  the 2008 'lean' season – the months before 
the harvest when stocks are low – could start early for many households. 
• Governments in the region have already taken measures to prevent a sustained 
increase in food prices, such as reconstituting cereal stocks in risk zones before the 
rainy season begins, providing price subsidies, and increasing the purchasing power 
of vulnerable populations by supporting o ff-season cash-crop agricultural production. 
• WFP's food and operations costs are now 30 pe r cent higher than at the same time last 
year because of increases in basic food commodities.  An additional US$183 million 
are therefore needed for the region. 
• If WFP does not receive additional funding, it  will become extremely difficult to help 
people as the situation deteriorates.  The higher cost of fuel for transport will also 
weigh on our budget as many countries de pending on imports are landlocked. 
• Mauritania 's president announced a US$112 million emergency plan to fight the 
impact of high food prices on 5 April.  Th e plan aims to increase food assistance to 
the poor, increase availability of basic f ood commodities in the domestic market and 
boost local agricultural production. 
• Mauritania depends on imports for 70 per cen t of its food needs.  High cereal prices 
on the international market are leading to an access crisis.  Traders are having serious 
problems importing, mainly due to cash flow constraints.  Wheat and sorghum prices have increased by 40 per cent since May 20 07 and vegetable oil prices by 25 per cent 
during the same period.  
• In Sierra Leone  the price of rice rose by almost 40 per cent during 2007.  In the same 
period the price of palm oil increased by ab out 50 per cent, and that of bread (wheat  G/AG/GEN/76/Add.1 
 Page 5 
 
 
  flour) by 25 per cent.  In January 2008, the Bread Manufacturers Association called 
its members out on strike against the rising price of wheat flour, which is manufactured locally with imported wheat.  
• In Guinea Bissau the price of imported rice remain s 25 per cent above the October 
2007 level.  The high prices for the na tional staple may cause hardship when 
household cereal stocks from the 2007 harvest run out.  The most recent food security 
monitoring survey indicated that some 14 per cent of rural households are either 
moderately or severely food insecure, with th at proportion expected to rise as the lean 
season (June to October) approaches.  
(b) Middle East 
• The high price phenomenon comes against a background of worrying food production 
forecasts.  A report issued in March by FAO states that agriculture in the Middle East 
is likely to suffer losses because of high temperatures, droughts, floods and soil 
degradation.  
• Price rises have an impact on WFP's operati ons in the region.  At present we are 
providing food to nearly four million peopl e in the Middle East – in Iraq, Syria, 
Yemen, Egypt and the occupied Palestinian territory. 
• Food price rises are having a catastrophic effect on the Syrian  economy and the 
ability of the Government to introduce econom ic reform measures.  Price rises are 
coinciding with a reduction in oil producti on (the Government's main source of 
income).  The result is an increase in the number of people needing support and 
mounting pressure on the social welfare system. 
• Newspapers in Egypt  are reporting that people have started to go for inferior 
commodities lacking in nutritional value;  they are buying less and less meat/poultry/cheese and they are also cutting down on expenses for education and 
health expenses, etc. 
• To address the concerns about rising food prices, the Government of Egypt  has had 
to boost its spending on subsidies to the poor from 20 b illion Egyptian pounds 
(US$4 billion) to 30 billion Egyptian pounds (US$6 billion).  Τhis includes increased 
spending on bread subsidies from 9 billi on Egyptian pounds to 15 billion Egyptian 
pounds. 
• On 13 February, the Iraq  Parliament approved the 2008 Budget and allocated 
US$3.6 billion to the Public Distribution System (PDS) to ensure that food distribution would continue to people in  Iraq.  Due to commodity price rises 
worldwide it is difficult to say whether th is allocation will be enough to cover the 
entire year.  
• WFP has requested US$87.5 million to help feed its caseload of more than 750,000 
displaced people in Iraq .  It has recently estimated it needs an additional 
US$9 million to cope with rising food and fuel prices. 
• Yemen , which imports around 75 per cent of its  food requirements, is feeling the 
impact of rising food prices as so many households spend a large proportion of their income on food.  The price of wheat has doubled since February.  Other consumer 
goods have also seen sharp price rises. 
•
 The Government of Yemen  is trying to stabilize the market by encouraging more 
local wheat production and the creation of more silos to store the wheat.  It is also 
encouraging the production and/or importati on of mixed (red) wheat which is more 
nutritious than white (soft) wheat.  
 G/AG/GEN/76/Add.1 
Page 6  
 
  (c) Latin America 
• The situation has been particularly harsh in Central America  where in the past year 
the price of maize, the key staple food crop,  has nearly doubled.  The price of beans, 
another staple commodity, also reached  unprecedented levels, partly because of 
unfavourable weather conditions. 
• According to a USDA study, Latin America is likely to bear the brunt of a food price 
shock.  The food gap (the amount of food n eeded to raise consumption of all income 
groups to the recognised minimum) could rise 24 per cent by 2016, compared to 8.7 per cent in Asia and 6 per cent in Sub-Saharan Africa. 
• Due to escalating market prices, in rural El Salvador , with the same amount of 
money today people can purchase 50 per cent less food than they did 18 months ago. This means that in principle their nutritiona l intake, on an already poor diet, is being 
cut by half.  
• In Nicaragua  the price of tortilla went up 54 per cent between January 2007 and 
January 2008.  
• In Guatemala  a 10-per cent increase in the quota of tariff-free imports of maize has 
been announced.  Authorities are concerned about possible increases in food prices 
during the lean season (May-July 2008) a nd particularly about processed cereals 
(tortillas) consumed in urban areas. 
• In response to this situation, WFP is presently trying to determine the impact of rising 
food prices on the region's poor with a view to anticipate future trends and support 
national Governments in the region in th e adoption of effective intervention and 
mitigation strategies.  
(d) Asia  
• WFP's purchase cost for rice in Bangkok was US$460 per tonne on 3 March.  Five 
weeks later, it is now US$780. 
• At the end of January, Afghanistan  President Hamid Karzai appealed for 
US$77 million to help feed an additional 2.5 million people, now hungry because of 
rising food prices.  WFP Food distributions to  urban Afghans unable to afford staples 
began in March.  
• Average wheat prices in Afghanistan have in creased by 67 per cent since the start of 
2007;  on average, Afghans who are not enga ged in agriculture now spend 75 per cent 
of their income on food.  
• Wheat prices in Tajikistan  have increased by 128 per cent over the last year, whilst 
wheat flour prices increased on average by 76 per cent. The prices of vegetable oil 
have increased by 126 per cent during this period. 
• The Tajikistan government has appealed to th e international community for help with 
fuel and food, reporting to WFP that up to two million people might be in need of 
food assistance in the coming weeks
. 
• The price of rice has risen between 25 and 30 per cent throughout Bangladesh  over 
the last three months.  In 2007, the price of rice rose around 70 per cent.  
• Cambodia  has been producing a rice surplus since 1996.  However, in 2007, so much 
rice was exported to neighbouring countries to cash in on the higher prices paid by 
foreign traders that normally self-sufficient Cambodians now face a rice gap.  
• WFP in Cambodia risks having to cutting school feeding activities mainly due to 
price increases.  Existing donations had been  expected to last until August 2008 but 
price rises could make the school breakfast programme for 450,000 children 
unfeasible.   G/AG/GEN/76/Add.1 
 Page 7 
 
 
  • Partly as a result of increased commod ity prices and connected unrest, the 
Indonesian  Government has recently expanded its  rice subsidy programme by 50 per 
cent.  The Government plans to provide subsidized rice to an estimated 80 million 
people.   
 
 
__________