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Gates, Ford, Kellogg Families Target Food to Ease Unrest

Foundations supported by Bill Gates and the Ford, Kellogg and Walton families are combining to relieve stresses on the food supply that are pushing prices higher and adding to unrest around the globe.

Their initiative, called AGree, announced today in Washington, will fund agricultural research and analysis that will consider the needs of rural economies and the environment as well as energy and health issues as the world population surges by 38 percent over the next four decades, the foundations said today in a statement.

“Food policy is too important just to be left to people in the food industry,” said former U.S. Agriculture Secretary Dan Glickman, one of the long-term initiative’s leader. “For too long, food and farm policy have been related to a narrow range of interests.”

Costlier food has contributed to riots across northern Africa and the Middle East that toppled leaders in Egypt and Tunisia. Higher prices also helped drive 44 million people into poverty in the past year and another 10 million may join them should a United Nations food index rise another 10 percent, the World Bank said April 16.

Rising Food Prices

In the U.S., food prices may increase by as much as 4 percent this year, the most since 2008, according to the U.S. Department of Agriculture. Panera Bread Co., a St. Louis-based restaurant chain, and General Mills Inc., the maker of Wheaties, plan to raise prices after wheat traded in Chicago soared 57 percent in the past year. McDonald’s Corp. (MCD) Chief Financial Officer Peter Bensen said last month that the company will probably raise prices to help counter the surge in ingredient costs.

The foundations’ initiative is also meant to foster dialogue between large, industrial growers of staple foods such as corn and soybeans and organic farmers concerned about the environment, said Gary Hirshberg, the chief executive officer of Stonyfield Farm Inc., a Londonderry, New Hampshire-based unit of Danone SA of Paris.

‘Agnostic’ Research

By supporting agricultural research that’s “agnostic,” the initiative hopes to guide U.S. policy makers as they formulate decisions that will affect production practices domestically and overseas, said Hirshberg, a co-chairman of AGree.

Kraft Foods Inc. (KFT), based in Northfield, Illinois, increased U.S. prices on Maxwell House and Yuban ground coffees by about 22 percent in March. Orrville, Ohio-based J.M. Smucker Co., maker of Folgers coffee, raised prices by 10 percent in February.

Tyson Foods Inc. (TSN) and other meat processors have faced higher feed costs as corn and soybean prices advanced to their highest levels since 2008. Corn and soybean meal represent 42 percent of Tyson’s cost of raising chicken, which made up 34 percent of its sales in 2010, according to the company.

The UN’s Food and Agriculture Organization’s index of 55 food commodities dropped 3 percent in March, although the FAO predicted prices would rebound to new records. Prices have rallied since late March when the USDA said domestic corn stockpiles at the start of the month fell to their lowest since 2007 and soybean inventories shrank to the smallest since 2003.

World grain production in 2010-2011 is forecast to drop 1.1 percent to 2.24 billion metric tons, the UN agency said last month. Cereal usage is estimated at 2.28 billion tons, exceeding production. The UN raised its projection for ending stockpiles by 1.7 million tons to 479 million tons.

The William and Flora Hewlett Foundation, the David and Lucile Packard Foundation, the Rockefeller Foundation and the McKnight Foundation also are backing the initiative.

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

To contact the editor responsible for this story: Steve Stroth at sstroth@bloomberg.net.

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