Jeff Sachs rips into Canada (food aid, food crisis, ODA)

[DevO]

http://www.theglobeandmail.com/servlet/story/RTGAM.20080426.wfood26/BNStory/National/home

Canada deaf to growing hunger crisis, UN aide says

SINCLAIR STEWART AND PAUL WALDIE

From Saturday's Globe and Mail

April 26, 2008 at 2:11 AM EDT

NEW YORK and TORONTO — A key adviser to the United Nations has sharply criticized Canada for abandoning its leadership role in international development, and urged the country to step up its level of aid to poorer countries in the face of soaring food prices.

Jeffrey Sachs, one of the world's best-known economists, accused the Harper government yesterday of adopting an “antagonistic,†and occasionally “mocking,†tone toward the implementation of the UN's Millennium Development Goals, a group of objectives aimed at alleviating problems ranging from poverty to global warming.

“We've seen essentially no global leadership from Canada on poverty, hunger, disease, climate change and foreign assistance,†Mr. Sachs, who is a special adviser to UN Secretary General Ban Ki-moon, said in an interview at his Manhattan home. “This has been a huge surprise for me as a lifelong admirer of Canada, that we don't see the ambition of the Canadian people manifested in Canada's policies right now.â€

The UN has issued an urgent plea for food aid because of an unprecedented rise in grain prices. The agency's World Food Program, which dispenses food to developing countries, said it needs an additional $755-million (U.S.) just to meet its annual target. The sudden rise in prices for corn, wheat, rice and soybeans, among other crops, has sparked violent protests in Haiti, Africa and parts of Asia.

A long line of customers wait to buy cheap government-subsidised rice imported from the US and priced at 25 pesos (0.63 USD) per kilo at a public market in Manila on April 25, 2008. Philippines is trying to cope with the rising price of commodities, especially rice, which is the staple food. President Gloria Arroyo ordered the distribution of cheap priced subsidised rice through government schools to ensure it reaches the poor families.

A long line of customers wait to buy cheap government-subsidised rice imported from the US and priced at 25 pesos (0.63 USD) per kilo at a public market in Manila on April 25, 2008. Philippines is trying to cope with the rising price of commodities, especially rice, which is the staple food. President Gloria Arroyo ordered the distribution of cheap priced subsidised rice through government schools to ensure it reaches the poor families. (ROMEO GACAD/AFP/Getty Images)

The Globe and Mail

“This steeply rising price of food — it has developed into a real global crisis,†Mr. Ban said yesterday in Vienna. He added that the UN, the World Bank and the International Monetary Fund will meet next week in Bern, Switzerland, in an effort to address the problem.

“We must take immediate action in a concerted way,†the Secretary-General said.

Canada donated $176-million (Canadian) to the UN food program last year, making it the third-largest contributor. International Co-operation Minister Bev Oda has yet to respond to the latest appeal, but a spokeswoman said the minister would be making an announcement next week. It is expected that Canada will increase its aid significantly to help with the deficit.

The Canadian government has committed to providing the program with the cash equivalent of 420,000 tonnes of wheat annually, but it has missed that target several times. (Under current conditions, buying that much wheat today would cost roughly 60 per cent more than last year.)

In 2005, Canada also revamped its food aid policy. Until then, 90 per cent of Canadian food aid had to be bought from Canadian producers. The change dropped that quota to 50 per cent, making it easier for aid agencies to respond to emergencies by sourcing food closer to the affected region.

Mr. Sachs, among others, has been a vocal critic of the “blank cheque†approach to foreign aid, and has argued that donor countries should instead be focusing on sustainable development and support for agriculture and research.

However, he said his pleas for Canada to take a special role in agricultural matters have fallen upon deaf ears dating back to the government of former prime minister Paul Martin.

“Canada did not show leadership on critical issues, like agriculture, for example, where I was shocked by discussions I had in Ottawa,†he said. “Then the [Martin] government fell, and this government has come in and it's been antagonistic, rhetorically and in policy. It's almost mocking, some times, with these objectives.â€

Despite Canada's status as one of the larger donors, it has failed to meet a commitment to donate 0.7 per cent of its gross domestic product to the Millennium Project, despite a resource boom over the past few years that generated considerable economic wealth.

Mr. Sachs said he was told on one occasion by a cabinet minister that Ottawa couldn't boost its aid to meet this target because it would threaten the country's budget surplus.

The current food crisis has forced many aid organizations to cut their assistance programs this year because they can't afford to buy as much grain as they used. In addition to wheat, other crops have also seen enormous price increases. Canola has nearly doubled while corn, rice and soybean have also reached record prices this year.

“We are in this terrible dilemma,†said Jim Cornelius, executive director of the Winnipeg-based Canadian Foodgrains Bank, which provides food aid to dozens of countries on behalf of 15 church organizations.

Mr. Cornelius said the charity received a record amount of cash donations from Canadians last year, but the money doesn't go as far as it used to. “If we don't see some fairly significant changes [to grain prices] there's probably a 40-per-cent decline in the amount of food we can provide,†he said.

Drought, increased demand from countries like China and India, and the diversion of corn into ethanol production have all been blamed for the unprecedented spike. Yet others argue this situation has been exacerbated by massive speculation by big investors.

Investment funds have poured an estimated $200-billion (U.S.) into commodity markets in recent years and some say that has distorted food prices.

But the fund managers argue the charge into commodities has been driven largely by ordinary investors looking for returns. One fund manager told a special agriculture meeting in Washington this week that his typical client was a “a schoolteacher, aged 42, earning $62,000 per year.â€

[Biggest Fan]

One of the more interesting developments of 'today'. It seems that gas prices and speculation all have some role in the problem but as I have heard this is an issue more to do with the challenge we are going to face as our world population increases with time. If agricultural output does not increase we will see continued inflationary pressure. A funny twist I have heard with respect to the problem is how the oil companies make more money with these inflationary times. The higher the prices the more money they make- To these companies these are good times. I do not know if the 'food' companies are making money in these times, it would be interesting to know.

[Biggest Fan]

A pretty good link describing what seems to be going on with food prices. http://www.msnbc.msn.com/id/24334375/

Edited April 27, 2008 by Guest

[d_rawk]

To these companies these are good times. I do not know if the 'food' companies are making money in these times, it would be interesting to know.

Well, the fertilizer companies certainly are .. got potash?

A funny twist I have heard with respect to the problem is how the oil companies make more money with these inflationary times.

Any commodity is making out like bandits right now - to the degree that they aren't hedged already at lower prices (which most are). The oil companies and the nat. gas companies are doing well and at these prices, previously unaffordable exploration (Bakken oil fields, shale gas in Quebec and Saskatchewan) are suddenly plausible production opportunities. That production, of course, when it comes online ought to drive the price back down some, political complications notwithstanding.

I'm skeptical of the 'speculation' allegations levied at the current prices of commodoties and oil in particular. How does one gauge an intrinsic value of oil? If one can't, how does one suss out speculative buying/pricing over hard demand/supply?

Certainly there is speculation in the futures markets, but I wonder if it isn't being overplayed in an attempt to assuage fears that high oil prices have finally arrived.

That said, none of this speaks to Mr. Sachs' charges that Canada been failing to meet its own declared intentions towards the poor, which it has. It/we ought to either step it up, or at least be honest about the limitations and revise our self-aggrandizing targets accordingly. I'd prefer the former.

[Biggest Fan]

2 thoughts #1 The last part of the link was interesting in that at the present time there are countries that are buying a lot more than they have had in the past (panic buying ?) making the whole situation worse. There might be a real shortage of these basic food staples. #2 It would be sad if the countries that often help 'feed' the poor are no longer willing to do so because they can make to much selling it. I read that Argentina is 'outlawing' some exports to make sure they have enough food for themselves. This is getting the farmers all angry because they can make a whole lot more in the open market.

Edited April 28, 2008 by Guest

[d_rawk]

A funny twist I have heard with respect to the problem is how the oil companies make more money with these inflationary times.

Oof, maybe not. See Exxon's earnings report today? I'm freakin' shocked. Second highest quaterly earnings in its history, but still gets beaten down because it doesn't meet expectations. Ok, expectations were high .. after all, oil prices are high.

But get this:

Revenue - $116.85 billion (+34%)

1st Quarter net income - $10.89 billion (+17% from 1st Quarter last year)

Taxes Q1 2008:

Income Taxes - $9.3 billion

Sales-based Taxes - $8.4 billion

Other Taxes - $11.6 billion

= $29.3 billion

That is $2.69 in taxes for every $1 profits.

And every single viable American candidate (Democrat or Republican) are calling for higher taxes on the oil companies because the oil companies just must be behind this rise in prices.

This has surpassed the level of lunacy. I'm a tax guy. I'm not opposed to taxes. But that is madness and explains to some degree why our Canadian sow-their-wild-oats oil & gas producers who went abroad are now returning home to Canada (ie. Talisman). "Obscene profits" my butt. You guys are harder on domestic producers than Chavez!

(Sorry KevO, your thread has been hijacked. Hey Biggest Fan, let's take it back to the US Recession thread .. I've got an O'Reilly interview to post that I think you'd get a kick out of)