Mar 16 - 22, 2009

Worldwide, the food price spiral is moving up and down but there is a fear that the food prices will persist on upward trajectory in 2009. Projectionists in USA and Canada have forecasted upsurge of food prices throughout the year. In Pakistan, this fear has started to intimidate common person by casting it shadows not only on food but also on non-food prices as consumer price index, which is a common continuum to gauge retail prices, has monstrously mounted to 23.49 percent in July-Feb FY09 from 8.9 percent in the corresponding period FY08 and 8.04 per cent in FY07.

According to the Federal Bureau of Statistics, the CPI statistics draw its bases out of variation in costs of 374 food and non-food items in 35 major cities of Pakistan. It is relevant to recall unofficial estimates in a recent news report that shows an average 200 percent rise in food prices since 1999. Sensitive price index has increased to 28.65 percent in the period under review over 12.15 percent in the comparable period and wholesale price index to 24.70 percent over 11.68 percent.

While prices of oil commodities have boiled down from all time high of $147 per barrel to $47 per barrel during the last year, there was no such letup in food prices, triggering apprehensions of net importers of food products that food shortage would become a major issue to be dealt with in days to come. Agro-based countries whose major exports compose of foods but main imports are industrial and agriculture inputs will certainly be affected with the rise in costs of commodities, which will bring slowdown in agriculture growth and subsequently exports volumes and earnings unless they adept to industrialized as well as organic farming to increase crops yields. "The rapid increase in demand for food is the biggest cause of the price spiral," writes John Gapper in Financial Times. "New forms of genetically modified seeds that tolerate drought and salty water will be needed in developing economies affected by the climate change," he cited a research fellow at International Food Policy Research Institute in Washington DC as saying.

Global food shortage due to both unprecedented increase in demands and supply deficiencies has equally opened up an opportunity for agro-based economies to reduce trade deficits by enhancing agriculture exports.

Global economic crisis that disturbs momentum of international trade is also an important force to bring up the price spiral that is temporarily going downward. According to a World Bank report, international trade will decline to 80 years low this year. This will result in contraction in industrial production of exporting countries and build up socio-economic hardships. In fact, poverty is the leading offshoot of slowdown in economic activities. The report says this historical plunge will thrust heavy pressures on East Asian economies. Most of the developing economies will become incapable of alleviating poverty triggered by down in international trade volume.

Global food security mist do not surround Pakistan perhaps because of its having agriculture as mainstay and the country is expected to expose differently to the causes and problems related to the food crisis. However, diminishing crop yields in the country and internal food supply constraints cannot guarantee food safety in long run. According to a report by Food and Agriculture Organization of the United Nations, analysing crop prospects and food situation in 32 countries predominately consisted of 20 African countries, defined different natures of food insecurities in them. Civil strife, low productivity, conflict and insecurity, etc. close these nations on the verge of food crisis, it mentioned. Out of 10 countries in Asia, excluding Pakistan, seven face severe localized food insecurity, according to the report.

The rise in prices or inflation results in economic and social unrest in life of common person, jacks up poverty graph, and makes it difficult to earn livelihood. Fluctuation of prices in international market is transferred through importation in Pakistan. Since the country has a long association with the trade deficit, inflation in the country is highly dependent on international trade. Regardless of bumper crops and marvellous growth of agriculture sector, import payments against sugar, wheat, petroleum products, machineries, fertilizers, chemicals, pesticides, etc. determine prices of products. However, this cannot absolve other factors such as ineptitude in price control and in controlling profiteering and hoarding of responsibilities of soaring prices.

Government can overcome supply constraints through improving supply chain management and it can prevent price escalation of food products by intervening into the market when required. There are some countries administrating state authority to rein in market forces that exploit commodities market under the pretext of free market economic principles. Such as Russia has a control over prices of food items. Public welfare strategy can be imitated to an extent of serving people.

In addition to cope up with the challenges of food security and inflation in general, government should develop a system that facilitates agriculture production. Future of global food safety will be decided by agro-based countries. This speciality of Pakistan should be utilized for complementation. For instance, agriculture produce may be bartered with technology of collaborating countries. Dearth of modern technology and mechanization are prime culprits of low crop yields. These exchanges will build agriculture sector of the country on sustainable basis and contribute in global food safety.

Increase in agro production will compensate flight of foreign exchange for import payments and increase in yields of crops will decrease need of importing wheat and sugar, which despite are produced in the country. International agriculture researches inculpate climate change for bringing down crop yields and recommend biological research and use of commercial hybrid seeds that reduce consumption of waters and chemicals.