World Bank debuts tool to fight food price swings

WASHINGTON: Poor farmers in the developing world will now be able to use Wall Street-style financial wizardry to protect against food price volatility, under a new program announced by the World Bank on Tuesday.

The Washington-based development lender said it was launching a new risk management product to provide an initial $4 billion in protection from volatile food prices to farmers and consumers in developing countries.

"With this new tool, we can help farmers, food producers, and consumers protect themselves against price swings, strengthen their credit position, and increase their access to finance," World Bank chief Robert Zoellick said.

"This tool shows what sensible financial engineering can do: make lives better for the poor," Zoellick said in a statement.

The new financial product -- which will help buyers hedge against price spikes in wheat, sugar, cocoa, milk, cattle, corn, soybeans, and rice -- was developed jointly by the World Bank and Wall Street bank JPMorgan Chase.

On Wednesday and Thursday, agriculture ministers from the G20 grouping of rich and developing countries will meet in Paris to discuss measures to constrain volatility in food prices.

Anti-hunger activists have urged the ministers to take steps to prevent a global food crisis, including boosting transparency of food stocks and cutting production of biofuels, which divert crops like corn into use as vehicle fuel.

Surging food prices have sparked riots and uprisings around the world this year, including in Tunisia, Egypt and other Middle East and North African countries.

Copyright AFP (Agence France-Presse), 2011