Commodity boom eats into aid for world’s hungry

WASHINGTON (Reuters) - Food donations to the world's hungry have fallen to their lowest level since 1973 as surging grain and shipping prices outpace the aid budgets of rich nations.

The United Nations has cut food rations in places like Uganda and Cambodia, and the situation has raised alarm among aid groups, who worry aid will come up short for the world's 850 million hungry people.

The United States, the largest donor of food aid, which spends about $2 billion a year on donations to Ethiopia, Sudan, Afghanistan and other vulnerable nations, is watching as soaring costs eat into aid budgets.

In 2004, the United States paid an average of $363 to buy a tonne of food aid and ship it to the developing world, officials say. This year, delivering that same tonne of aid abroad will cost an estimated $611, an increase of 68 percent.

Part of the story behind that jump is growing demand for corn-based ethanol, an alternative to gasoline, which helped push spot maize prices to a 10-year high earlier this year.

There's also burgeoning demand for grains and food in emerging markets like India and China -- wheat is at an 11-year high on U.S. markets and global rice prices have jumped 50 percent since 2000 -- and recent record crude oil prices.

Little is certain this early into the price boom, but aid professionals are already clear who will lose out unless donor countries move to increase aid budgets in step.

"The amounts available will come down, and you're going to be able to feed fewer people. This is the worry," said Charles Uphaus, who tracks foreign aid at Bread for the World, a U.S.-based advocacy group.

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