2008: THE YEAR OF GLOBAL FOOD CRISIS
AROOJ ASGHAR (email@example.com)
May 12 - 18, 2008
Global food prices surged 57% last month from a year earlier. There are a number of forces driving that price explosion. A perfect storm of food scarcity, global warming, rocketing oil prices and the world population explosion is plunging humanity into the biggest crisis of the 21st century by pushing up food prices and spreading hunger and poverty from rural areas into cities. Experts say that for the first time in the history, the impact is spreading from the developing to the developed world. More than 73 million people in 78 countries that depend on food handouts from the United Nations World Food Program (WFP) are facing reduced rations this year. The increasing scarcity of food is the biggest crisis looming for the world, according to WFP officials. At the same time, the UN Food and Agriculture Organization have warned that rising prices have triggered a food crisis in 36 countries, all of which need extra help. US President issued an interesting statement last month; he said that India's growing middle class is responsible for the global food shortage. Apparently he missed the fact that India is net exporter than net importer of food items. In another front, World Bank President Robert Zoellick recently told a conference: "As the Indian commerce minister said to me, going from one meal a day to two meals a day for 300 million people increases demand a lot." And he's only talking about the poorest of the poor. There are 1.1 billion people in India, and they're all improving their diets and eating more Western foods. Therefore role of India can't just be ignored or can't only be blamed. India may import up to 2 million tons to build stockpiles up from imports of 1.8 million tons in 2007 with an eye on creating a strategic reserve of 5 million tons of wheat and rice to meet emergencies. Pakistan is considering to doubling its wheat imports this year. The world's grain stocks are at their lowest for 30 years. The World Bank predicts global demand for food will double by 2030. This is partly because the world's population is expected to grow by three billion by 2050, but that is only one of many interlocking causes.
World Bank points out that global food prices have risen by 75% since 2000, while wheat prices have increased by 200%. The cost of other staples such as rice and soya bean has also hit record highs, while corn is at its most expensive in 12 years. The increasing cost of grains is also pushing up the price of meat, poultry, eggs and dairy products. And there is likelihood that prices will continue their relentless rise, according to expert predictions by the UN and developed countries.
High prices have already prompted a string of food protests around the world, with riots in Mexico, disputes over food rationing in West Bengal and protests over grain prices in Senegal, Mauritania and other parts of Africa. In Yemen, children have marched to highlight their hunger, while in London hundreds of farmers protested outside Downing Street. In India alone, more than 25,000 farmers took their own lives last year, driven to despair by grain shortages and farming debts. Last year Australia experienced its worst drought for over a century, and saw its wheat crop shrink by 60%. China's grain harvest has also fallen by 10% over the past seven years. Scottish farmers warn that food security is becoming an issue for the first time since the Second World War. People are committing suicide in Pakistan due to poverty and lack of food. Pakistanis have to stand in long queue to get relatively cheap wheat from State owned Utility stores. If prices keep rising, more and more people around the globe will be unable to afford the food they need to stay alive, and without help they will become desperate. More food riots will flare up, governments will totter and millions could die.
According to WFP estimates it needs an additional US$500 million to keep feeding the 73 million people in Africa, Asia and Central America. WFP needs extra money by the middle of 2008 so as to take action in time. Time is changing dramatically, no one can even think of this time few years back where governments would have been thinking to provide all the necessary living items to its people but now to provide food. Age-old patterns of famine are changing shapes; it's not different than modern age famine.
Unlike past, the profile of the new hungry poor is now urban not rural, which is new. Food is available in the markets and shops but many people can't afford to buy it. This is indeed a new face of hunger. Government of Pakistan is subsidizing like any other government that is not sufficient to bring down the wheat prices in the country.
The rise in global temperatures caused by pollution is also beginning to disrupt food production in many countries. According to the UN, an area of fertile soil the size of Ukraine is lost every year because of drought, deforestation and climate instability. The UN Intergovernmental Panel on Climate Change has predicted that, over the next 100 years, a one-meter rise in sea levels would flood almost a third of the world's crop-growing land. At the same time as demand for food increases, the amount of land available to grow food on is reducing. An area twice the size of Scotland's entire agricultural area has been swallowed up by Chinese towns and cities in the last 10 years.
Another key driver is the soaring cost of oil, which has touched US$120 a barrel for the first time. This increases the transport costs; oil makes crop fertilizers more expensive. According to the World Bank, fertilizer prices have risen 150% in the past five years. This has had a major impact on food prices, as the cost of fertilizer contributes over a quarter of the overall cost of grain production in the US, which is responsible for 40% of world grain exports.
Now the world is focused on bringing down the food prices instead of focusing on the reduction or elimination of poverty and more importantly ignoring UN millennium development goal. As a matter of fact, increased food prices and their threat not only to people but also to political stability have made it a matter of urgency.
Different countries are taking different steps to improve food situation in the country, few are as follows;
* China is curbing exports to ease prices.
* Vietnam, one of the world's three biggest rice exporters, will reduce shipments by a million tons this year to 3.5 million tons to ensure supplies domestically and curb its highest inflation in more than a decade (20% year over year ó ouch!). The government also said it's considering a tax on rice exports. Egypt, Cambodia and Guyana have all also put export bans on rice in place.
* Kazakhstan just suspended its wheat exports to tame domestic inflation. Kazakhstan is the breadbasket of Central Asia, and the only state in the region that exports grain, about 50% of the 21 million tons it says it harvested last year.
* Ukraine stopped wheat exports this month and reduced barley exports.
* Argentina - the world's fourth largest wheat exporter ó has effectively pushed back the date that new shipments can leave the country.
* India has already put restrictions on its rice imports. And its wheat output, second only to that of China, may drop 1 million tons to 74.81 million tons in the March-April harvest because of a drop in acreage.
* Pakistan exported its wheat to earn foreign exchange and now paying even more to import to feed its people.
The involvement of women in the agricultural sector is growing in many developing countries, especially with the development of export-oriented irrigated farming. Most rural women face worsening health and work conditions, limited access to education and control over natural resources, insecurity in employment, and low income. Possible steps to remedy this include: giving priority to women's access to education, information, science and technology; improving their access to and ownership of natural resources through laws and support for income-generating activities; supporting public services and investment in rural areas to improve women's lives; and assessing the effects of farming practices and technology, including pesticides, on women's health, and reducing use and exposure.
Availability of water for irrigation is a serious issue as large parts of central and western Asia and much of Africa are running out of water. About half of those regions' internal renewable water resources are already below the minimum threshold for development i.e. 500 cubic meters per person per year. By 2020, the water available per person will probably be about one-third of the 1950 level, or even less. In order to get food item, availability of enough water is necessary. The crop yield increases are generally below the average, leaving most of poor countries as net food importers, even though they are rich in agricultural biodiversity.
Most farmers face uncertainty and high risks, which they try to minimize. But risk avoidance often comes at the cost of maximizing profits, so agriculture falls far below its potential. In such cases, enhancing local knowledge and the exchange of information is very important. Understanding and uptake of new agricultural technologies are necessary, while it must be kept in mind that education focuses on learning facts rather than developing problem solving skills.
The worrying matter is the weak medium-term growth of supply. The rapid increases in yields of the 1970s and 1980s, at the time of the "green revolution", have not been slowed. Will the prices remain high? Two opposing forces are at work. The first is the typical demand and supply mechanism. The market will bring prices back down as supplies expand and demands shrink. The second force is the current pressure on the world's food system. This is true of both demand and costs of supply. Prices are likely to remain relatively elevated unless energy prices tumble.
The higher food prices have powerful distributional effects. Increase in subsidies is vital. It is equally important to ensure that the additional supplies reach people in time. This will automatically bring down the prices. This is highly dependent on the country's bureaucratic machinery. It is important that the focus should also be shifted on the reforms of farm sector. Lastly, greater resources need to be devoted to expand long-run supply. Increased spending on research will be essential, especially into farming in dry-land conditions. It will be good to create awareness among people on the efficient use of water, fertilizer pricing and usage and additional investment. The food and fuel crisis of 2008 is going to continue hunt the world for sometime. Nobody knows how long these shocks will last. But rapid policy changes need urgent action.