U.N. and World Bank say to tackle food crisis

By Laura MacInnis

BERNE (Reuters) - U.N. agencies and the World Bank pledged on Tuesday to set up a task force to tackle an unprecedented rise in global food prices that is threatening to spread social unrest.

The international bodies called on countries not to restrict exports of food to secure supplies at home, warning that could make the problem worse.

"We consider that the dramatic escalation in food prices worldwide has evolved into an unprecedented challenge of global proportions," the United Nations said in a statement.

This had become a crisis for the world's most vulnerable people, including the urban poor, it said after a meeting of 27 international agency heads in the Swiss capital, Berne, to chart a solution to food price rises that have caused hunger, riots and hoarding in poor countries.

"Though we have seen wheat prices fall over the last few days, rice and corn prices are likely to remain high, and wheat relatively so," World Bank President Robert Zoellick told a joint news conference.

Higher costs of wheat, rice, and other staples have put extreme pressure on aid providers such as the World Food Program (WFP), a U.N. agency aiming to feed 73 million people this year.

U.N. Secretary-General Ban Ki-moon called on the international community to provide the WFP all of the $755 million in emergency funds it needs for the crisis.

"Without full funding of these emergency requirements, we risk again the specter of widespread hunger, malnutrition, and social unrest on an unprecedented scale," Ban said.

Concern about soaring food costs and limited supplies have toppled Haiti's government and caused riots in parts of Africa.

The task force, bringing together the heads of U.N. agencies, funds and programs, the IMF and the World Bank under the leadership of Ban, will set priorities for a plan of action and make sure it is carried out.

WORLD BANK PLEA

The U.N. Food and Agriculture Organization's (FAO) Food Price Index, measuring the market prices of cereals, dairy produce, meat, sugar and oils, was 57 percent higher in March 2008 than a year earlier.

The surge is due to several factors, including increased demand in developing countries, higher fuel costs, drought in Australia, the use of crops for biofuels, and speculation on global commodity markets.

And developing world farmers, often the poorest in their countries, are not benefiting from the higher prices. They tend to eat most of what they grow rather than selling it, and higher prices for fuel and fertilizer are putting them off growing more, World Bank analysis shows.

"Even in some areas where people know that prices are higher, they are not planting more because they are fearful that they face very high input costs," Zoellick said.

There was at least some short-term easing in prices of key commodities on Tuesday.

U.S. rice futures fell more than 2.5 percent, deepening a retreat from last week's record high as the world's biggest exporter Thailand said it would release government stocks for domestic use and traders looked ahead to Asian harvests.

The Thai pledge to release 2.1 million tons of stockpiled rice came a day after a trade official said the country's rice prices were likely to ease by about 20 percent in coming weeks on increased supply from the new domestic crop.

Rice prices are expected to ease as countries rush to boost output, but the market is unlikely to return to levels of recent years, He Changchui, the FAO's Asia head, said in Bangkok.

India slapped export taxes on basmati rice and other products as the government unveiled a series of moves to tackle inflation fuelled by the rise in food prices.

The World Bank called on countries not to ban exports of food, saying that only worsens the problem.

"We are urging countries not to use export bans," World Bank President Zoellick said in a statement. "These controls encourage hoarding, drive up prices and hurt the poorest people around the world who are struggling to feed themselves."