The European Commission (EC) proposed on Friday to give 1 billion euros (1.6 billion U.S. dollars) to help developing countries tackle rising food prices and improve their productive capacity.
The special "facility for rapid response to soaring food prices in developing countries" would operate for two years, 2008 and 2009, the European Union's (EU) executive arm said in a statement.
It would be provided to the developing countries which are most in need, based on a set of objective criteria, giving priority to supply-side measures, improving access to farm inputs such as fertilizers and seed, possibly through credit, and to safety-net measures aimed at improving productive capacity in agriculture.
"The impact of high food prices is particularly severe for the world's poorest populations," said EC President Jose Manuel Barroso. "This one billion Euro facility aims to generate a strong and rapid agricultural supply response."
The Commission said eligible countries and the share they should receive would be selected on the basis of transparent criteria, which may include reliance on food imports, food price inflation, and social and fiscal vulnerability.
"While all developing countries are potentially eligible for support, assistance will be provided to those that are severely affected by the food price crisis in socio-economic and political terms, have a need for measures to be taken and which do not have the means or capacity to respond unassisted," the Commission said.
The money would be in addition to existing development funds and would be paid via international organizations, including regional organizations, such as the United Nations and the World Food Program.
The Commission hoped EU governments and the European Parliament could approve its proposal by November so as to put it into force in early 2009.
But several member states have voiced doubts since the money would be taken from an unused fund from the EU's costly agricultural budget, including the unspent subsidies to farmers.
While rising food prices have had negative effects on many developing countries and their populations, high agricultural prices have contributed to a reduction of EU farm subsidies to support agriculture which eats up more than 40 percent of the EU's annual budget.
The Commission said this provides an exceptional opportunity to provide a temporary facility to help stimulate farming in developing countries.
Farm subsidies have been a very sensitive issue in the EU. At least eight EU member countries, including Britain, Sweden and the Netherlands, plus the European Parliament, have questioned the legality of using unspent farm subsidies, although they generally agreed to provide support to developing countries.
"There is a fairly broad consensus on the need to act here, given the crisis which is taking place," Commission spokesman Johannes Laitenberger said at a daily news briefing.
"In the Commission's opinion, this is the most efficient and most rapid instrument that could be used," he added.
Source: Xinhua
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