The Financial Crisis Hits the World’s Hungry

The extremely poor can’t catch a break, it seems. A year ago, with food prices through the roof, they were at risk of starving to death as a result of not being able to afford to eat. But now, with food prices falling, things don’t seem to have got much better:

The number of hungry around the world is at risk of increasing as the financial crisis cuts investment in agriculture and crops, said Abdolreza Abbassian, secretary of the Intergovernmental Group on Grains at the United Nations Food and Agriculture Organization in Rome. The total increased by 75 million last year to 923 million, the UN estimates.

"The net effect of the financial crisis may end up being lower planting, lower production," Abbassian said. "More people will go hungry."

Interestingly, this seems not to be a result of lower crop prices per se, so much as less credit:

In Brazil, the world’s third-biggest exporter of corn after the U.S. and Argentina, production may fall more than 20 percent because farmers can’t get loans to buy fertilizer, said Enori Barbieri, a National Corn Producers Association vice president. The nation’s coffee harvest, the world’s largest, may drop 25 percent for the same reason, said Lucio Araujo, commercial director at farmer cooperative Cooxupe, located in Guaxupe…

Minnetonka, Minnesota-based Cargill and Decatur, Illinois- based Archer Daniels, the world’s largest grain processors, are among the crop buyers to halt financing for growers in Brazil, said Eduardo Dahe, who represents the companies as president of the National Association of Fertilizer Distributors.

This seems to me to be a cut-and-dried opportunity for the IFC to step in. Agricultural loans, which get paid off with future crops, are a standard financial instrument, and it shouldn’t be hard to restart them, either with direct bilateral loans or through a system of guarantees. Come on, World Bank Group — show us how fast you can move when you want to!

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