Bloomberg News

Obama Calls for Africa Aid as Companies Pledge $3 Billion

May 18, 2012

President Barack Obama will announce new investments in African agriculture in a speech in Washington - his first addressing food insecurity - as a precursor to the weekend G-8 summit at Camp David, Maryland. Photographer: Andrew Harrer/Bloomberg

President Barack Obama will announce new investments in African agriculture in a speech in Washington - his first addressing food insecurity - as a precursor to the weekend G-8 summit at Camp David, Maryland. Photographer: Andrew Harrer/Bloomberg

President Barack Obama called for a new phase of African farm aid as 45 companies worldwide including Cargill Inc. pledge more than $3 billion to ease threats to global security posed by scarce nutrition.

The “New Alliance for Food Security and Nutrition” has a goal of pulling 50 million people from poverty in the next 10 years, Obama said today in his first speech on food security, before traveling to the Group of Eight summit at Camp David, Maryland.

“As the wealthiest nation on earth, I believe the U.S. has a moral obligation to lead the fight against hunger and nutrition and to partner with others” to end poverty, Obama said at a symposium in Washington. In the audience were U2 singer Bono and several African heads of state.

World food supplies are being stressed by rising demand in emerging markets and increased use of crops in biofuels, leading to higher and more volatile prices, according to a U.S. intelligence report released last week. Import-dependent countries such as Egypt, Pakistan, Bangladesh and Sudan are especially vulnerable to food unrest, the report said. Competition for water will fuel instability in South Asia and the Middle East, the U.S. said in March.

Food Riots

Food supplies gained global attention after a run-up in corn, wheat and soybean prices in 2007 and 2008 prompted riots in more than 60 nations, according to the U.S. State Department. The G-8 summit in Italy in 2009 led to a pledge for $22 billion in agricultural development assistance to boost food production in poorer countries.

The U.S. promised $3.5 billion and the next year unveiled a “Feed the Future” plan that focuses on farm development in poorer nations and generating additional investments from other donors. The new initiative is requesting an additional $1.2 billion over the next three years from existing and new donors.

Increased production will lift Africans out of poverty and stabilize economies, Obama said today, referring to his own relatives in Kenya and the hunger experienced in the region’s villages.

“Fifty years ago, Africa was an exporter of food,” Obama said. “There is no reason why Africa should not be feeding itself and exporting food again.”

Private Sector Involvement

The new pledges further involve the private sector in alleviating hunger and spurring development in poorer countries, said Rajiv Shah, head of the U.S. Agency for International Development.

“You cannot have stability and security as long as regions and countries and communities are deeply food-insecure,” Shah said. Companies have expertise and market skills governments can’t match, which are crucial to apply in Africa as the continent attracts new investment, he said.

Commitments from companies range from $100 million over three years from Agco Corp. (AGCO:US), a Duluth, Georgia-based farm- equipment maker, to a pledge to raise more cows and ewes from Selous Farming, a Tanzanian livestock- and crop-producer. Syngenta AG (SYNN) of Basel, Switzerland, a chemical and seedmaker, is committing $500 million over 10 years.

Minneapolis-based Cargill, the biggest U.S. agribusiness, plans to invest in two Mozambique projects, and St. Louis-based Monsanto Co. (MON:US), the world’s biggest seedmaker, is committing $50 million over 10 years. DuPont Co. (DD:US), the No. 2 seed producer, is increasing its work in Ethiopia to improve soil analysis. The region’s investment climate is improving, Chief Executive Officer Ellen Kullman said in an interview.

‘Matter of Momentum’

“It’s a matter of momentum,” the chief of Wilmington, Delaware-based DuPont said. “More people are collaborating, and there’s greater transparency.”

Africa, because it’s the continent with the most undeveloped and under-producing land, is a promising source for new nutrition, said Josette Sheeran, vice-chairman of the Cologny, Switzerland-based World Economic Forum.|

“The world can’t feed itself by 2050 without Africa,” she said. Achieving the necessary productivity requires governments to get past the “hand-out” era of aid, and even the “hand- up” programs to encourage self-sufficiency, she said. “We need handshakes” among governments and businesses to integrate the continent’s farmers with the broader world, she said.

Government promises don’t bear fruit if businesses aren’t interested in developing markets, said Ertharin Cousin, who last month became the executive director of the Rome-based World Food Program.

Wal-Mart, Farmers

“Unless you can provide private-sector interest, work we do isn’t sustainable,” Cousin said yesterday in an interview. The WFP’s Purchase for Progress program that buys crops from small farmers for food aid, for example, is connecting those producers to buyers such as Wal-Mart Stores Inc. (WMT:US), which is sourcing from World Food Program-supported growers in Honduras and Guatemala. That keeps poor populations from becoming aid- dependent, she said.

Food costs reached a record in February 2011, helping to push 44 million people into extreme poverty and contributed to the Arab Spring riots across North Africa and the Middle East, World Bank President Robert Zoellick said.

World food costs have dropped 8.9 percent from a year ago and remain below levels in 2008. Corn inventories in the U.S., the world’s biggest grain-shipper, may double by the end of the next marketing year, further easing inflationary pressure.

Still, rising demand will require 70 percent more food production by 2050 as the planet adds 2 billion people, according to the United Nations. Food-price pressures may ease in the longer term should governments and companies invest in better transportation, fertilizer and water use, last week’s U.S. intelligence report said.

While the G-8 summit of some of the world’s largest economies will address food insecurity, the meeting is expected to be dominated by the euro zone crisis. Members are the U.S., Canada, France, Germany, Italy, Japan, Russia and the U.K.

To contact the reporter on this story: Alan Bjerga in Washington at abjerga@bloomberg.net

To contact the editor responsible for this story: Jon Morgan at jmorgan97@bloomberg.net


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