Financial meltdown and food crisis may cause increased malnutrition in developing countries

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Washington, Dec 2 : A new analysis by the International Food Policy Research Institute (IFPRI) has determined that the combined impact of the current financial meltdown and the food crisis could cause major increases in malnutrition in developing countries, resulting in 16 million more undernourished children in 2020.

Many developing regions have experienced high economic growth in recent years. Between 2005 and 2007, developing countries in Asia grew at an annual average rate of nine percent, while African economies grew at six percent.

In 2008, however, with the onset of the food and financial crises, that robust growth has tapered off.

"The current crises are likely to have strong and long-lasting effects on emerging economies and the people most in need," said Joachim von Braun, director general of IFPRI.

"The unfolding global financial crisis and economic slowdown have eased some pressure on food prices, but they also significantly reduce the income-earning opportunities for poor people," he added.

Even before the world food crisis, the poorest of the poor were struggling to survive.

According to von Braun, poor people spend 50 to 70 percent of their income on food and have little capacity to adapt as prices rise and wages for unskilled labor fail to adjust accordingly.

The financial crunch lowers the real wages of poor workers, and leads to rising unemployment.

"The financial crunch has also constrained the availability of capital at a time when greater investment in agriculture is urgently needed," said von Braun.

As part of the analysis, IFPRI developed projections to track changes in the production and consumption of major food commodities between 2005 and 2020 if there is a world recession that reduces economic growth between two to three percent.

In this scenario, the projections assume that agricultural investment and productivity also decline, in line with the reduced economic growth.

Compared to a baseline scenario in which high economic growth continues and productivity and investments in agriculture are maintained, IFPRI found that the cumulative effect of reduced growth, investment, and productivity would lead to increases in the prices of basic staples.

By 2020, rice prices would rise by 13 percent, wheat by 15 percent, and maize by 27 percent, compared to the baseline scenario, and 16 million more children would be malnourished.

According to Mark Rosegrant, director of Environment and Production Technology at IFPRI, if developing countries and investors can maintain agricultural productivity and investments under a recession, these dire consequences can be avoided.

"We need more public spending in R and D, irrigation, and productive services in developing country agriculture, now," he said.

ANI

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