RAWALPINDI, Dec 14: The United Nations Food and Agriculture Organisation (FAO) has estimated that another 40 million people have been pushed into hunger in 2008 primarily due to higher food prices, bringing the overall number of under-nourished people in the world to 963 million.

Preliminary estimates just-published in the ‘State of Food Insecurity in the World 2008’ of the FAO compared to the 923 million people faced with hunger in 2007, and went on to say that the ongoing financial and economic crisis could tip even more people into hunger and poverty.

Prices of major cereals have fallen by over 50 per cent from their peaks earlier in 2008 but they remain high compared to previous years.

Despite its sharp decline in recent months, the FAO Price Index 2008 was still 28 per cent higher in October 2008 compared with October 2006.

With prices for seeds and fertilizers and other inputs more than doubling since 2006, poor farmers could not increase production. However richer farmers, particularly those in developed countries, could afford the higher input costs and expanded plantings. As a result, cereal production in developed countries is likely to rise by at least 10 per cent in 2008. Increase in developing countries may not exceed even one per cent, fears the report.

The vast majority of the world’s undernourished people - 907 million - live in developing countries, according to the 2007 data reported by the State of Food Insecurity in the World.

Of these, 65 per cent live in only seven countries: India, China, Congo, Bangladesh, Indonesia, Pakistan and Ethiopia. Progress in these countries with large populations would have an important impact on global hunger reduction.

About Pakistan, the report says the country provides an illustration of the complexity of commodity price dynamics at the national and regional levels. The country is a relatively large regional producer and consumer of wheat, usually in a surplus situation. Wheat production in 2008 is down just over six per cent from last year’s record level, but wheat imports are expected to be between 2.5 and 3 million tons.

With a very large population and relatively slow progress in hunger reduction, nearly two-thirds of the world’s hungry -- 583 million -- live in Asia, the report says.

The world hunger situation may further deteriorate as the financial crisis hits the real economies of more and more countries. Reduced demand in developed countries threatens incomes in developing countries via exports.

Remittances, investments and other capital flows including development aid are also at risk. Emerging economies in particular are subject to lasting impacts from the credit crunch even if the crisis itself is short-lived.

Like other regions in the world, the Asia and Pacific region shows a mixed picture of success stories and setbacks in hunger reduction. Asia has recorded modest progress in reducing the prevalence of hunger from 20 to 16 per cent and a moderate reduction in the number of hungry people from 582 million to 542 million people.

However, with a very large population and relatively slow progress in hunger reduction, nearly two-thirds of the world’s hungry people still live in Asia.

Despite the government’s strong intervention in the domestic wheat sector, prices have increased sharply since mid-2007. Indeed, by June 2008, they had nearly doubled their levels of a year earlier in deficit provinces.

In this case, a major factor is that wheat prices in Pakistan are still much lower than in neighbouring countries, particularly Afghanistan, which has been struggling with a combination of unfavourable weather and insecurity.

The large price differentials between the two countries have resulted in substantial informal cross-border flows and in Pakistan importing wheat from international markets. At the same time, a reduced capacity to subsidise fertilizer has resulted in a 60 per cent increase in di-ammonium phosphate (DAP) fertilizer prices at the producer level, which has led to a sharp drop in its use and affected yields adversely.

FAO has examined the impact of high food prices on household welfare. Among the poor, it is the landless and female-headed households that are most vulnerable to sharp rises in basic food prices. Poor households tend to be net buyers of food, even in rural areas where agriculture and staple food production determine the principal livelihoods for many.

According to FAO data from nine developing countries, including Pakistan, about three-quarters of rural households and 97 per cent of urban households are net food buyers.

In Pakistan, agricultural households gain substantially from higher food prices, with benefits accruing even to some of the poorer households.

The most important exception found in the countries analysed is in Pakistan, where female-headed households represent a larger proportion among the wealthier income groups. Among rural households, female-headed households face considerably higher welfare losses in all countries, the report says.

In conclusion, the report observes that the dramatic rise in global food prices poses a threat to food and nutrition security. It also creates many economic, social, political and environmental challenges with knock-on effects for both development and humanitarian activities.