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Food Prices

Volume 475: debated on Wednesday 30 April 2008

1. What assessment his Department has made of the effect of increases in world food prices on developing countries. (202410)

The Government are very concerned about the effect of rising food prices on developing countries. According to the World Bank, 850 million people are already going hungry, and as prices rise that number will increase. The international community must act now both to help the world’s poorest people to cope and to address the underlying causes of the current hardship. Last week, the Prime Minister hosted a meeting with leading experts, including the head of the World Food Programme, to strengthen the international response to the growing crisis. In addition, the UK Government announced a £455 million aid package to provide assistance to the hardest hit and to address long-term solutions.

The new money is welcome, although only £30 million is going into emergency food aid. Given that many commentators have been predicting that the dash for biofuels would result in exactly the sort of negative consequences that we are seeing in world food markets, why is it only now that the right hon. Gentleman’s Department is sounding a cautionary note about the use of biofuels? Will he confirm whether he is opposed to or in favour of the continued use of the renewable transport fuels obligations?

The Government have announced the Gallagher review to ensure that the full economic, environmental and social impact of biofuel production is taken into account. However, I am intrigued by the hon. Gentleman’s line of questioning, given the position that his own party’s leader took on the renewable transport fuels obligation. The right hon. Member for Witney (Mr. Cameron) said that—

We all acknowledge that rising living standards, biofuels and some crop failures have all had an impact on rising prices, but is it not a fact that prices have been pushed up to astronomical levels by rampant speculation in the market? Are not these speculators gambling with people’s lives, so what will the international community do about it?

As I made clear, a range of different people from a range of different parties have previously argued the case for biofuels, but it is right to recognise that a range of different causes are affecting the rise in food prices. There has been a drought in Australia, which has significantly affected agricultural production; there is, of course, concern about biofuels; there is a rise in commodity prices, not least in the cost of petroleum, which has contributed to a rise in input costs such as fertiliser; and consideration needs to be given to the operation of the agricultural market. That is why we have continued to argue the case for common agricultural policy reform and why our own Prime Minister made clear to G8 leaders the need for a co-ordinated international response.

Does the Secretary of State accept that the encouragement of home production is a legitimate part of the response to the world food crisis?

There appears to be conflicting evidence as to whether the immediate challenge that we face is a function of sufficient levels of food but inadequacy of distribution through the market, or a global deficit in food production. That is why we need to consider the approach both of the UK Government and of the European Union, while addressing the immediate humanitarian need and raising levels of agricultural production elsewhere in the world, particularly in Africa, where we have seen a decline in agricultural productivity in recent decades, in sharp contrast to countries such as India where we have seen a significant uplift.

May I draw my right hon. Friend’s attention to the worldwide online petition on the crisis, launched by the international citizens’ movement, Avaaz, which has already been signed by almost 100,000 people? I invite my right hon. Friend to sign it, as I have. Does he agree that the petition confirms that people worldwide are demanding action from world leaders to solve this crisis—action now, not months of talking and negotiation?

I agree entirely. It is of real concern to billions of people around the world that 850 million people are already hungry, and that the figure is potentially set to rise. That not only presents a challenge to the Government, who have sought a genuinely co-ordinated international response, but imposes a responsibility on business, civil society and individuals.

Will the Secretary of State acknowledge that there is a need for sustainable biofuels, and that a major reason for rising food prices is rising living standards in countries such as China and India? Will he redeploy the resources at his Department’s disposal to ensure that we can raise productivity levels in parts of Africa using the expertise that exists in this country, which the International Development Committee has called on the Government to mobilise more effectively in the future?

It is true that significant and sustained economic growth in China is leading to a different pattern of consumption—principally an increase in meat consumption, which is a direct consequence of the fall in the production of maize and other crops in recent years. The right hon. Gentleman made a more general point about biofuels. Of course we must distinguish between those that may be sustainable and those that are judged not to be. We are at risk of demonising the whole issue of biofuels, when what we actually need are facts rather than anecdotes.

As for the right hon. Gentleman’s substantive point about DFID’s contribution, at the meeting that he attended in Downing street last week we were able to announce the provision of £400 million for agricultural research, and we want to see that money flow into exactly the sort of productivity increase to which he has referred.

The dash for biofuels is beginning to have a real effect on the food market—it is leading to food shortages in some countries, and we have observed the escalation of prices—but what effect is it having in countries that are offering people huge grants to grow crops for biofuels rather than food? Is that not what will really damage the world in future?

As I have said, I expect the Gallagher review to examine precisely those issues in trying to discern the contribution of biofuels to sustainability, or to a lack of sustainability. A range of subsidies has been introduced by a range of countries for different reasons to support biofuel production. Research is important to our understanding of the challenge of sustainability, but, as our Prime Minister pointed out in his letter, we also need a co-ordinated international response to ensure that the dialogue is not limited to the United Kingdom but takes place in the other countries that are producing biofuels.

The Secretary of State is right to draw attention to the increasingly alarming reports of rising food prices and the resulting food shortages. At yesterday’s summit in Geneva, it was reported that the emergency appeal for assistance had reached barely half its target. I acknowledge the Government’s contribution, but the Secretary of State spoke of calls for international co-ordination. What tangible steps are our European partners and the G8 countries taking in response to that appeal, and is the British Government’s contribution a fixed financial amount or will it be used to buy a particular quality of food supplies?

We do not tend to provide food aid in the same way as the United States Government, who purchase in bulk and then transfer food. We provide resources that are available to be used in-country, often for local sourcing. I should be happy to write to the hon. Gentleman listing the countries in which the money—approximately £30 million, or $60 million—to support the World Food Programme’s efforts to raise, I believe, $500 million is being used. The United States has made a significant contribution to that appeal as well.

We will continue to discuss this issue with our European partners. I strongly welcome yesterday’s statement by Ban Ki-moon, the United Nations Secretary-General, about the need for a co-ordinated response. I am also encouraged by the response from the Bretton Woods institutions—the International Monetary Fund and the World Bank—to the letter that our Prime Minister issued ahead of the spring meetings, arguing for exactly that focus at the G8 meeting that will take place in Japan in July.

Much of what the Secretary of State has announced about the food crisis is welcome, but is he not somewhat embarrassed by the finding of a report produced by his own Department last year that Ministers have failed to support agriculture in the developing world? Have not rising food prices been met by alarming ministerial complacency?

I thought it would not take the Conservatives long to blame the Department for the global phenomenon of rising food prices. As I said, only last week I was able to announce the investment of £400 million in agricultural research. We have been a major funder of such research over a number of years. The Department has expertise in the shape of, for instance, livelihoods advisers. However, it is right to recognise the challenge presented by the need to raise levels of productivity in a range of countries, and we are working with international partners to achieve that goal.

But this is the Department for International Development’s own report, and it says that direct spending on agriculture by the Department has halved over the past 10 years. Therefore, do we not now need Ministers to bring forward plans to bind together Government, business and scientific research in a new global partnership for agriculture similar to the one that delivered the green revolution in Asia in the 1960s?

DFID spends about £120 million a year on agriculture. We have increased to about £55 million a year our financing for safety nets programmes in Bangladesh and many African countries, which support the poorest farmers and their families in those countries, and we have increased spending on rural infrastructure. Last year, we spent £34 million to reduce the cost of transportation in Africa. The emphasis that I have placed within the Department on growth in Africa naturally and inevitably means a focus on agriculture given the role of smallholder agriculture in Africa. It is right to recognise that we need to work with international partners on agricultural productivity, and we have done that and will continue to do so. It is also right to recognise that we have in recent days made a sizeable contribution to agricultural research.