June 30 - July 06, 2008

Pakistan is listed among 36 countries facing food crises. We are at the brink of devastating food crisis. Food inflation is mounting with every passing day and touching record highs and can even be aggravated as there is a risk that farmers will be planting less rather than more. Poor farmers are unable to take maximum advantage of booming food market as prices of these commodities have soared in recent months. The point of concern is that prices of flour, the staple food of the people, have more than doubled while the price of edible oil has shot up over 100% in one year. Similarly increase in petroleum prices has tremendously added to inflation.


Food prices have gone up by about 50% on an average, around the world. According to a United Nations task force in the near term, global food shortages and higher prices are more likely to cause malnutrition then outright famine particularly in Asia, Africa and South America. The staple foods are getting unaffordable in poor countries and it is difficult to underline the cause to trigger these problems internationally. The dramatic rise in the prices of wheat rice, corn, oils and other essential food items has erupted riots, protests and strikes. The crisis has spread its tentacles from Peru to Indonesia, Afghanistan and Senegal and even in developed nations. Global food shortage is also by part an outcome of the production of ethanol (bio fuel) using food grains. The UN independent experts called bio fuels a crime against humanity and urged a moratorium on their production. In recent months, rising food costs have sparked violent protests in Cameroon, Egypt, Ethiopia, Haiti, Indonesia, Ivory Coast, Madagascar, Mauritania, the Philippines and other countries. In Pakistan and Thailand, the situation is grim and reached a point where army troops have been deployed to avoid the picking of food from fields and warehouses, while price increases fuelled a general strike in Burkina Faso.

Over the past few months, at Chicago's main market phenomenal increase in the price of each bushel of wheat is a case in point. Speculations also drive prices of other commodities up also, and thus a vicious circle has been formed.

According to a joint report titled "Agricultural Outlook, 2008-2017î by the Organization for Economic Cooperation and Development (OECD), and the United Nations Food and Agriculture Organization (FAO), because of these changes, food prices have undergone a paradigm shift and will not drop back to pre-crisis levels for at least 10 years, putting long-term pressure on governments facing the food crises.


In the context of Pakistan, the situation is worsening day by day as the government has failed to overcome the wheat crisis and it seems to have been caught napping on the inflation front. The recent price hike of food items has adversely affected the economy. There is in an increase in the number of suicides due to poverty and hunger and the spate of ugly scenes at the utility stores is forecasting that the worse is yet to come. There exists galloping inflation, and fall in purchasing power of the Pak Rupee. Official statistics released in February 2008 showed 18% increase in food prices, the highest ever monthly increase from over 14% in October 2007. Food inflation has registered 3.04% increase in January 2008 as compared with the increase in the preceding month of December 2007. The salaried class is the worst sufferer.

The price of flour is hitting at around Rs25 per kg. Rice price per kg has gone up to Rs100 and above, sugar about Rs28 per kg and milk Rs40 per litre and so on and so forth. Nothing is left untouched as far as increase in prices of essential items is concerned. More and more people are being pushed below the poverty line and the middle-class is vanishing gradually. It is feared that if this situation prevails for a longer period, only two classes would be left: the rich and the poor. Compared with average prices for 2006-07, the report forecast, that in 2017 the price of wheat, adjusted for global inflation, will be 2% higher and rice 1% higher. What is especially worrying for Pakistan is the forecast according to which prices of oil seed a major import for the country will be up by 33%. Experts also agree that this time around, the increase in prices will not be reversed.


There is almost no reason for food crisis and food inflation in Pakistan but the poor administrative measures like absence of smooth supply line, and checking hoarding and smuggling pose a serious problem. The market manipulation by hoarders of grains is also a major cause of food price hike. During the year 2007 estimated wheat production fell short of the country's requirement by one million tons and government had to import 1.5 million tons wheat to meet the shortfall. The prices of different qualities of rice have surged enormously in the local market due to hoardings and export.

Primary cause of food inflation is recorded as the old cliché of supply and demand. Of course, the world population is growing and consumption outpaces production. Climate change, and particularly drought and water shortages are causing crop failures. On the other hand rising oil prices and growing awareness about environment-friendly fuel have compelled consumption of crops for bio-fuels. Even in affluent societies of the developed world, buffer stocks of food reserves are running low because of several crop failures and a fear of shortages is leading to speculative buying and driving prices up to unprecedented levels. Rice, corn, soybean and wheat prices have climbed to record levels this year partly because of droughts in Australia, a freeze in Kansas and increased demand for corn to make ethanol. Pakistan could face 4 to 5% water shortage during the Kharif season however; the situation would improve as the water flow into dams could increase due to the melting of snows. Rice production this year has been estimated at 5.72 million tons, against the last year's output of 5.5 million tons.


The government should work to draft a strategy on both short and long term responses to food supply strains, which economists have linked to factors, including high fuel and fertilizer costs, the use of crops for bio fuels, and commodity market speculation. There should be an outright ban on export of staple crops like grain and rice. As a pragmatic approach to the problem, an immediate attention to revolutionize the farming sector should be a top priority to ensure a sustained economic and general wellbeing of the masses.

The Federal Committee on Agriculture (FCA) has set up a task force to curb hoarding of food items, particularly wheat, and their smuggling to neighboring countries. The FCA has also backed a Punjab government's move to maintain a ban on inter-provincial movement of wheat till the government achieves the wheat procurement target of 5 million tons. The ban does not affect wheat supplies to provinces under the quota system. The new administration has to cope with a plethora of problems, and their order of priorities, as displayed so far, does not seem to include rising prices or food shortages, among the top. People are looking up to the elected representatives to lend sympathetic ears.