Apr 21 - 27, 2008

LAHORE: The recent wave of price hike has not only left negative impacts on the country's economy but also badly affected the monthly budgets of families. The salaried class people are the worst victims and their families are facing altogether difficult situation mainly due to limited financial resources.

Taking undue advantage of the situation, different private educational institutions also raised the tuition fees in their respective study programmes putting more financial burden on parents.

The recent spate of price hike that emerged due to rise in petroleum products also resulted in rise in production cost, local businessmen told PAGE. They said that increase in petrol, diesel, furnace oil and other petroleum products prices is affecting the economy.

"When the prices of these commodities rise, it affects all other necessary commodities, thereby adversely affecting the life of a common man as well," they added.

They suggested that if the government allows import of oil and reduces the duty structure and income tax and also eliminate the sale tax, the price of petrol, diesel, furnace oil and other fuels can significantly be reduced. This would consequently help in curbing inflation, they said.

A global surge in food prices is causing havoc across the developing world, and thousands of poor people are caught in a widening arc of hunger stretching from Egypt to Cameroon, to Zimbabwe.

According to the World Bank the numbers are stark. In one month, U.S. wheat export prices shot up from $375 to $425 per ton, and prices for Thai rice rose from $365 to $475 per ton. Both countries are major cereal exporters.

The United Nations Food and Agriculture Organization has reported that of the 36 countries in the grip of a food security crisis, 21 are in Africa.

According to the latest report, "Rising Food Prices: Policy Options and World Bank Response," increases in global wheat prices reached 181 percent over the 36 months leading up to February 2008, and overall global food prices increased by 83 percent. On average, poor people spend between 50 and 75 percent of their income on food purchases.

Price hikes in food have already sparked riots in several African capitals, rattling treasuries, and stoking unprecedented Malthusian scares. Oil, trading at $115 and more per barrel, is a major factor impacting a large part of the farm economy increasing prices on the entire food production and distribution chain. Equally problematic is the agriculture-led push toward bio-fuels where corn and sugarcane are being used to create ethanol, and oil crops are being used to create bio-diesel.

The 2008 World Development Report "Agriculture for Development" provides a compelling example of the food-for-fuel debate: over 240 kilograms (or 528 pounds) of corn - enough to feed one person for a whole year - is required to produce the 26 gallons, or 100 liters of ethanol needed to fill the gas tank of a modern sports utility vehicle.

Food-related Fast Facts reveal that 75 % of the world's poor people live in rural areas: an estimated 900 million people at the $1-a-day poverty level. Majority of them are in Sub-Saharan Africa and South Asia. Most of the world's poor people depend directly or indirectly on agriculture for their livelihoods. In Africa, demand for food is expected to reach $100 billion by 2015, double its level of 2000.

In addition, withering drought has decimated harvests in major wheat-producing countries as far apart as Australia and Kazakhstan, crimping supplies, and creating scarcity.

According to analysts, food crop prices are expected to remain high in 2008 and 2009 and then begin to decline, but they are likely to remain well above the 2004 levels through 2015 for most food crops.

The World Bank Group is helping countries to meet the challenges of high food prices by calling on the international community to make up the $500 million food gap required by the United Nations World Food Program to meet emergency food needs, a large portion of which is directed to Sub-Saharan Africa. The Bank has announced that it will double agriculture lending in Africa in 2009: from $450 million to $800 million. It calls for expanding and improving access to safety net programs, such as cash transfers, and risk management instruments to protect the poor.

Warning that soaring food prices could lead to increased poverty and unrest, several U.N. officials have called for urgent measures to tackle the global food crisis, which threatens to hit the world's poor the hardest.

The World Food Programme's (WFP) Deputy Executive Director has warned of the rise of a "new face of hunger" that will require the combined efforts of governments, the private sector, and humanitarian organizations to overcome. "Food prices are now rising at rates that few of us can ever have seen before in our lifetimes," John Powell told the Dubai International Humanitarian Aid and Development (DIHAD) Conference, according to a transcript of his remarks issued at UN Headquarters in New York.

He expressed particular concern about the fact that markets are full of food, but large numbers of people simply cannot afford to buy. The past few weeks have witnessed violent protests over rising food prices in a number of countries, including Burkina Faso, Cameroon, Egypt, Senegal, Morocco and, most recently, in Haiti, where several people have died in riots.

Meanwhile, the head of the UN Food and Agriculture Organization (FAO) called for urgent measures to reduce the impact of high food prices on the poor, which he said was due to a combination of factors such as reduced production due to climate change, increased demand for bio-fuels production and the higher cost of energy and transport.

Director-General Jacques Diouf made the appeal at the first-ever Global Agro-Industries Forum in New Delhi, which has been sponsored by UN agencies to focus on how such industries can contribute to poverty reduction.

Chronic neglect of agriculture in Asia and the Pacific has left over 200 million people in extreme poverty amid rising prices for foodstuffs and despite robust growth in other sectors, according to a U.N. report released recently.

The Economic and Social Survey of Asia and the Pacific 2008, produced by the United Nations Economic and Social Commission for Asia and the Pacific (ESCAP), says that 218 million people, a third of the region's poor, largely living in rural areas could be lifted out of poverty by raising agricultural productivity.

"The report asks the question why poverty still remains so high despite the much applauded high growth rates in the region," Jomo Kwame Sundaram, Assistant Secretary-General for Economic Development said, "The neglect of agricultural development and rural development has been among the main causes."

The 2008 survey, entitled "Sustaining Growth and Sharing Prosperity," calls for revitalization of agriculture through a focus on improving agricultural productivity and market orientation.

Reforms in land policy are needed to connect the rural poor to cities and markets and to make it easier for farmers to access loans and crop insurance, says the survey, which also proposes skills diversification training, to help the poor, particularly women, tap more job opportunities. The survey also calls for a comprehensive liberalization of global trade in agriculture, as this would take a further 48 million people out of poverty in the region.

"Without these measures, the gap between rich and poor in the region will only get wider and millions will be condemned to lives of persistent poverty," Ms. Heyzer said.

Looking at overall prospects of Asia and the Pacific in the near term, the survey says that the region's robust economic growth will continue in 2008, despite economic uncertainties in the United States and the continued appreciation of regional currencies. The developing economies in the region are expected to grow at a slightly lower but still robust rate of 7.7 per cent during the year, after having enjoyed the fastest growth in a decade in 2007.

However, the survey sees rising food prices as a key challenge in coming months. Food price rises are greater inflation challenges than oil prices as food accounts for a far higher proportion of consumer spending across the region. The survey projects that the shadow cast by the United States" economic situation is a long one, greatly contributing to the uncertainties that lie ahead.