Rising food prices since last three decades due to abrupt global climatic change combined with adoption of protectionist agriculture policy by all agrarian economies and in recent years highly aggravated food shortage situation caused due to onslaught of Covid pandemic and now due to ongoing global oil crisis, outcome of intermittent US and Iran waring activities, have totally reversed the results of all strategies controlling rising prices particularly of food items directly impacting the status of poverty. Besides that vast farm areas previously producing wheat, rice and other food grain products in rich and emerging economies have made a shift towards cultivation of crops used for production of bio-fuels. The production of corn based ethanol in advanced countries like USA and emerging economies of Latin America, Brazil in particular is said to be consuming almost 15% of total world corn crop. Similarly supply of sugarcane, palm kernel and rapeseed has been affected due to growing utilisation of these crops for producing bio-fuels as substitute of petrol and its related products. Consequently food prices continue to surge unabated.
It is on record of the World Bank that during the period from 2008 till end of 2010 food prices escalated by 30% on a global basis, thus pushing the large number of World,s population below poverty line. As such by year 2010 due to growing food insecurity in South East Asia alone, 64 million people are either on the verge of becoming part of their impoverished population or already have been categorised as poor.
During the year 2010 and onward particularly due to bad weather conditions in South Asia including Pakistan and India, which experienced the most disastrous floods and drought conditions ,which played havoc with crops, Huma life and their assets mostly in the rural areas. At the same time rising cost of fuel impacting energy prices also caused substantial increase in the cost of transport and overall cost of production of value added agriculture based products. Accordingly these countries are faced with hyper food as well as core inflationary conditions.
Pakistan, where the menace of hoarding and speculative trading is thriving the country continues to record substantial rise in food as well as core inflation, hence a major chunk of population suffers from food insecurity. On the other hand, the government’s efforts to remove artificially created shortage of food items through imports further worsened the trade deficit position.
Forecasts given by various international agencies regarding continuation of the surge in food prices is valid on the basis of the fast change in the lifestyles of the high and middle income bracket families of the concerned rich and emerging economies and also of the elite sections of society in the low income economies. Considerable change has been noted in the diet of people. The rich population prefers to eat high protein fooDBesidemsd, fruits and seafood etc. The consumption of staple grain is declining in such countries as such land under cultivation of food grains is being diverted towards growing animal feed items and also being used as grazing grounds for animals to boost livestock and dairy farming. Thus due to increase in demand of major food crops from low income developing countries food grain exporting countries have comfortably raised the prices causing not only increased drain of forex reserves of developing countries like Pakistan,but also compelled such countries to make provisions for providing subsidised food to economically disadvantaged class as part of their population thus mitigating the chances of their coming out of the poverty line.
In order to control food prices and reducing it to a level where essential food items are within reach of the impoverished class. The basic need is to match structural supply to structural demand of these food items by enhancing yield per acre, by providing quality seeds, fertilisers and know how based on latest farming technology(making use of AI technology). At the same time there is need to bring additional area under cultivation after reclamation of soil. No doubt all the provincial governments have plans to bring more lands under cultivation through developing the required infrastructure for land levelling and reclamation.
There is need to bring prices of quality seeds and fertilisers within the reach of farmers having small holdings by monitoring its price mechanism and curbing the trend of cartering of suppliers.
It has been pointed out by research studies carried out by all the agriculture universities in Pakistan that growers are unaware of ground preparation techniques for collective farming and sometimes they are found using fertilisers far in excess of what is required and above all they have failed to. Produce a new variety of crops introduced by agriculture research institutes.
As such there should be direct link between the agriculture research institutes /agriculture colleges/ universities producing and testing high yield agriculture inputs, including seeds etc and farmers of adjoins areas.
However from the long term perspective, the negative change in climate pattern due to global warming and at the same time increasing demand for the food grains in low income developing countries and growing trend towards reduced acreage under grain cultivation all over the world, will cause further mismatch between food grains demand and supply particularly among low income countries causing further rise in prices. This will continue to add to the number of poor unless these countries make supply adjustments on a continuous basis to meet the structural increase in demand for major agriculture food products.
In middle income developing countries like Pakistan, where households spend a higher percentage of their total income on essential food products that makes up a larger portion of the cost of food produced in the country, which is contrary to the rich countries where the cost of labour,transportation and modern marketing strategies add value to food products, not only in the form of adding calories, but also adds to already high price of food items, and it is how rich economies govern , the overall global price level of food items adding to severity of both food and core inflation. In the poor countries.
Moreover,generally, ineffective monetary and fiscal policies of low income economies fail to rectify the situation and accordingly stagnant economic growth and growing poverty is the ultimate outcome. In this regard it is essential that a tight monetary policy is enforced to arrest the rising inflation. It must be accompanied by steps to strengthen social safety nets to protect the impoverished population.
In Pakistan , despite the fact that State Bank of Pakistan is consistently implementing a tight monetary policy, inflation is still at galloping rate, which is harming the a overall economic growth rate of the country and has also nullified the impact of social safety nets measures taken to protect the poor. Stagnant growth of all sectors of economy due to reasons stated above and most importantly due to lack of good governance and the poor status of security, both on the borders and within the country, has further added to misery of the poor.
Assuming that a higher growth rate of the economy (3.5% to 4%) is achieved during the next fiscal year and all macro economic indicators are improved as projected by economic managers of the country, still one does not see a reduction in food prices in the foreseeable future. It is the thinking at world bank and other international agencies that world may face increased scarcity of inputs important for food cultivation like additional land water and energy resources etc, unless countries strive to use the latest technology on farms for higher yield growth.
It has been revealed that on global basis very few countries would be able to achieve the target of reducing poverty despite rising food prices internationally. Those who have made headway in this regard were able to do so by investing in expanding economic opportunities, strengthening legal rights and enhancing the participation of women in political process and most importantly making substantial investment in education and health care that enhances the access to services to all, especially to women and girls.