Tanim Ahmed

Even free traders now realise that there is an immediate need for intervention either in the form of a ‘new deal’ or a ‘global approach’ to food. In such a situation, the interim government in Bangladesh would do well to devise its own food policy regardless of what the lending agencies believe or suggest

FOOD crisis continues to make headlines across the world. As food prices keep rising, it is hurting increasing numbers of people — even the middle-income groups in many countries. Rising prices have been met with some form of price control, export restriction, subsidies or lower tariffs in 48 out of the 58 countries being monitored by the World Bank. It is typical of responsible governments around the world to impose some form of control measures to provide their citizens with some reprieve from soaring food prices.
   ‘A silent tsunami that respects no borders,’ said Josette Sheeran, head of the World Food Programme, on April 22. Robert Zoellick, president of the World Bank, on April 2, urged for a ‘new deal’ on food policy. Dominique Strauss-Kahn, managing director of the International Monetary Fund, wrote on April 21, ‘This calls for a more global approach to policies.’ Ban-Ki Moon, secretary general of the United Nations, said on March 3 that he had proposed that 2008 be called year of the ‘bottom billion’, which is the number of people considered to be living in absolute poverty and spending over half their earnings, or more, on food. A delegation of the Federation of Bangladesh Chambers of Commerce and Industries, at a meeting on April 22, called for the establishment of a ‘national food security council’ to monitor the production and supply of major food items during their meeting with the chief adviser, Fakhruddin Ahmed.
   The latest issue of the UK-based periodical, the Economist, dated April 19, sounded a warning over the ‘silent tsunami’ on its cover. A staunch proponent of the free market, the magazine, reproached government measures to deflate food prices suggesting that it would further distort the ‘market’. The magazine, in its issue of December 6, 2007, with its cover story titled ‘The end of cheap food’, had hailed the era of costlier food saying it would help reduce disparity across the world presuming that most of the global poor residing in the rural countryside, and dependent on agriculture, would profit handsomely from higher prices. The presumption, of course, was based on the supposed omnipotence of the free market that is expected to correct itself.
   But that has hardly happened. Farmers are yet to reap those rich dividends from high prices of their produce while some 100 million people are apparently threatened into being pushed below the international poverty line. Although the proponents of free market recommend that governments should aid their people with cash rather than through subsidised food since it ‘distorts’ the market less, they push for the World Food Programme to provide the world’s hungry with food. But the world food market has been anything but ‘free’, particularly due to the substantial subsidies of the North. Food prices had remained abnormally low for the last two decades and the free market champions advocated that poorer countries should grow cash crops with which they would later be able to trade for food. The December 6 issue of the Economist also suggested that freeing up agricultural markets would see an increase of produce that the poor countries specialise in, citing the example of cotton. Another report in New Age on April 23 citing a World Bank study on high-value agriculture states that high-value agricultural produce would have a global market worth of some $8 billion by 2020 and suggests that poor farmers could make higher profits from selling spices and vegetables. In the current context, any farmer would realise that it would be an utter folly as prices of staple has increased by such proportions as to completely eat up whatever profits they might make from vegetables and spices.
   Food, especially food staples, unlike other commodities that respond to the economic forces of supply and demand in a more reasonable manner, is an inelastic commodity and thus does not respond well to price fluctuations. The demand for food will remain as long as people are hungry, regardless of the price. Whether people are actually able to buy it would naturally depend on their ability to pay for it. The other way round, people will not buy extra food or gorge on them till they are sick simply because prices of rice fell from Tk 35 to Tk 5 per kilogram. Thus, during times of food crisis, as the prices rise higher to exorbitant levels, the premium to be reaped verges on the predatory.
   The industrial demand for food – biofuels – does not help matters either. With the United States subsidising maize for the biofuel industry, which though is highly inefficient, has caused production on vast tracts of land to be shifted from wheat to corn. Thus, the land that produced food is now under oil production.
   The problem with the current food crisis is that the market is not behaving according to the laws of economics as the opportunity cost of forgoing one’s food security for higher dividends on agro produce is too high, and this cannot be explained by economics alone since governments have to appease their electorates. Thus, India set an abnormally high ‘minimum export price’ to keep foreign buyers at bay while major rice producers including Thailand, Vietnam and Cambodia have all taken one measure or another to curb the outflow of rice. Although most of these countries would have some sort of a law to curb hoarding, which is basically defined as ‘refusal to sell’, there is no such international mechanism that prevents ‘hoarding’ by countries.
   Even free traders now realise that there is an immediate need for intervention either in the form of a ‘new deal’ or a ‘global approach’ to food. In such a situation, the interim government in Bangladesh would do well to devise its own food policy regardless of what the lending agencies believe or suggest. In this regard the suggestion of food rations have come up several times although the finance adviser summarily dismissed the idea, claiming rather irresponsibly that it might result in corruption.
   However, a small matter to be kept in mind is that a food crisis does not necessarily mean a shortage of available food. As in the present case, the food crisis is not so much due to shortage as it is due to a loss of income, which is in most cases the primary reason for mass starvation. Thus, answer to the prevailing food crisis lies more in augmenting the income of the poorer sections of the people than attaining record breaking levels of cereal production.
   With repeated suggestions for undertaking ‘vertical’ expansion of agriculture, suggestions of genetically modified crops and hybrid varieties are becoming ever stronger. In the case of Bangladesh, the military-controlled interim government had summarily decided to increase acreage of hybrid varieties of rice during the current boro season from about 250,000 hectares last year to some 1 million hectares this year with the goal of boosting production although hybrids require more inputs and are more susceptible to slight variations of external conditions. According to different quarters total rice production could easily be increased by at least 20 per cent with locally produced high yielding varieties developed by the Bangladesh Rice Research Institute. They point out that these seeds are also more resistant to adverse conditions and diseases such as the bacterial leaf blight or the leaf streak that have mostly infected hybrid paddy.
   The incumbents would be wise to initiate a process of devising a well-concerted comprehensive plan for agricultural production and plan necessary imports beforehand. The Trading Corporation of Bangladesh should fit the bill for that purpose and reactivation of this state trading agency would certainly benefit poorer sections of the people.