June 30 - July 06, 2008

Reproduced here below are the following lines from the Deloitte budget commentary:

"As a consequence of global fuel and food crises, combined with total lack of government action and significant reduction in agricultural productivity, the country is witnessing one of the worst inflation in the past two decades or so. While the overall inflation combined to 11% compared to 7.8% in the previous year, the food inflation has risen to 15%. As poor families spend 80% of their income on food, this has made tremendous impact on the daily lives of vast majority of the poor."

According to a recent report, the 1970s' menace is staging a comeback with its threatening global reach. While inflation is far higher in faster-growing regions than in the United States and Western Europe, every one feels the pain because of the globalization of trade, says Stephen Roach, Chairman Morgan Stanley, Asia region. The IMF figures also suggest that the inflation overrun will widen in 2008 with the developing economies already experiencing inflation three times higher than the industrialized economies. Fuel and food price hikes in poor as well as rich countries have sparked violent protests.

The relentless forces of inflation have ravaged the global territories with a vicious onslaught. As against 1970s' inflation, the current crisis is labeled by some as "Made in China." China's inflation hit the 12-year high level of 8.7 per cent in February, 2008. In order to control its domestic inflation, China has decided to build sizeable reserves of Soya oil, soybean and palm oil. This will send the international prices of these items further rocketing. India, who had managed to keep its inflation under 4 per cent during last so many years, is seen staring at a record high of 11 per cent. Its recent inflationary control measures like slapping of export ban on non-basmati rice and pulses, huge cut in import duties on food items, have received a setback in the wake of a subsequent fuel price increase.

The world financial organizations have set the alarm bells on to sound warnings of an impending food crisis. They have decided to substantially increase the credit and grant allocations for the poor African, Latin American and Asian countries to enable them to improve their food situation. The alarming scenario has made the cash rich nations to develop food stockpiles exposing the poorer nations to a severe food shortage risk. The increasing demand from China and India triggered by the huge size of their population, keeps the world food markets going with prices maintaining their northwards course. The world food reserves are touching an alarmingly low mark. The theory that the next world war will be fought for water now seems to be outdated. The threat of war for food has assumed incredible proportions during the last one year. Who could have imagined that the economy of the modern world will be so drastically changed within a short period of time when the prices of food items will be raised up to 150 per cent? The reasons given by the analysts are varied: population growth, limited arable land, dearth of irrigation water, reduced soil fertility, primitive farming methods and use of low quality seeds by the developing nations, skyrocketing energy prices, alternate use of maize and beans for bio-fuel, changing climate, global warming etc. etc. These factors have no doubt their bearing on the situation, but none of them could change the scenario as drastically as we see it to-day. Speculative commodity trading backed by huge hedge funds is at the back of this fallout. These speculative forces visit at will the global currency, stock, real estate, oil, metals and commodity markets. Their prolonged focus on any of these markets wreaks havoc on the weaker world economies. The sooner these forces diverted their attention from global food markets, the better for the world peace.

A report on the global food situation maintains, "Modern agriculture will have to change radically to better serve the poor and hungry if the world has to cope with a growing population and climate change while avoiding social breakdown and environmental collapse. Continuing with current trends in production and distribution would exhaust our resources and put our children's future in jeopardy." While the report has conveniently ignored to mention the role of speculative forces, it has at least shown genuine concern for the issue the world is presently threatened with.

Pakistan is strategically positioned to take advantage of the situation through a policy shift that decrees a sustained focus on its agro economy. The agricultural base of this country holds great promise even in the current bleak scenario. What we need is a corporate approach towards our economic issues. We can fast change into a food exporting economy brushing aside the current status of a food-deficient economy. There is a long outstanding demand for land reforms. Given the mindset of the ruling elite, be it a democratic form of government or a totalitarian setup, we can reasonably hope that the dream of any meaningful land reforms is not going to materialize. We can tackle the issue from a different angle by introducing corporate culture in this all important sector of economy. The feudal-private partnership concept under the umbrella of an effective legislation needs to be developed. The private partnership could be of domestic as well as of foreign origin. The corporate culture will increase the efficiency of the farm sector by restructuring it on modern lines. The opportunity has reached our doorsteps as the Gulf countries particularly Saudi Arabia threatened with water scarcity have decided to go for overseas farm projects. Pakistan, being a friendly Muslim country, attracts much of their attention in the capacity of a joint venture partner. The recent visits of government functionaries to these countries are said to have fruitful bearings. These countries are said to have committed an initial investment of $3 billion for agro projects in Pakistan. According to the available information, a certain percentage of the total farm output shall have to be set aside for the investing partner country leaving the remainder for our own use, or may be export.

God has been so kind to this country by always offering opportunities in the guise of challenges. Now it is for us to make use of this opportunity by responding in a business like manner rather than squandering it away in our usual awkward style. This time, let it be the genuine corporate style.