Editorial
South Asian anti-terror
consensus is way forward
ON THE very outset we want to extend our sympathies to and express our solidarity with the Indian people for the tragedy and loss of life caused by the series of bomb blasts that have claimed over 60 lives in the Indian city of Jaipur this week. Accusations have emerged in the Indian media, with insinuations by the Indian police, that a Bangladesh-based radical group may have had a hand in the blasts. The Bangladesh government has said that the Islamist group in question, Harkat-ul-Jihad, are marginalised and have been so since they were banned in the country and a crackdown netted their supreme, the Reuters news agency reported on Saturday.
In the past decade, terrorist manifestations of religious extremism have emerged as a phenomenon across the world, and South Asia is no exception. This fact is also recognised by governments at the regional level, given the charters and resolutions that seek to address the issue of terrorism in the South Asian bloc. But while this is an oft-discussed issue, South Asia has till now failed to apply a regional approach to address this problem.
At the national level – be it in India or Bangladesh, the dividends that corporate globalisation and neo-liberal economic policies have brought have ultimately caused stark economic disparities and miseries for the majority. This has provided a fertile ground for a political and social experiment hitherto unknown in South Asia: that of religious radicalism and consequent terrorism. While the mainstream liberal democratic forces have often failed to deliver welfare and prosperity to large swathes of society, the left ideological movement which might have represented the dispossessed and the disenfranchised has been marginalised through a variety of factors. This has created a constituency for the religious radical right.
Also, the destructive and violent military invasions by the US and the UK in Muslim-majority West Asia, specifically Afghanistan and Iraq, has steadily radicalised large swathes of society in countries which can empathise with the misery of foreign oppression, be it economic or military.
Today, faced with these realities, South Asia’s leaders and society need to pursue a reasoned and united politico-economic approach to address the root causes of terror. It is against this backdrop that we would like to point out that the accusations by the Indian media and suggestions by the Indian police that a Bangladesh-based group might be behind the bombings — all prior to a thorough investigation — is not in the best interests of regional harmony. While such accusations, and the Indian media’s tendency to bracket Bangladesh with Pakistan, may succeed in ratcheting up nationalist sentiment, the real issues will stay off the table unless a more rational approach is adopted. We urge governments across South Asia to rise above their parochial vision and realise that terrorism is a problem that abides by no borders.
In Bangladesh, the incumbents have taken some pragmatic steps in containing the influence of Islamist radical groups. But few, if any, of these measures will stave off terrorism for perpetuity. At best they are temporary and static solutions to a dynamic problem. We must also point out that the government will have to address the Indian media’s latest accusations with more than the casual and routine reply that has come from the foreign adviser. Governments across the region must talk and engage in language that rises above accusations and denials for there to be any meaningful progress in this regard.
Indian envoy’s puzzling comment
When talking about different aspects of the Bangladesh-India relations on the Bangladesh Television’s weekly discussion series ‘Shomoyer Kotha’, which was aired on Friday, the Indian high commissioner, Pinak Ranjan Chakravarty, claimed that the people who die in border shootings are not innocent and are mostly smugglers. His claim is puzzling on the one hand, as it contradicts the reports of local media and the findings of human rights organisations vis-à-vis the border shootings over the years and raises some disturbing questions on the other, as it suggests that he and, by implication, his government has tacit support to such extrajudicial killings by the Border Security Force of India.
Killings of Bangladesh nationals by the BSF have been a regular phenomenon on the frontiers. In October 2007, the human rights coalition Odhikar reported that more than 700 people had been killed by the Indian border guards since January 2000. The report was a compilation of media reports on border shootings in the period. In most of the cases, the media reported that the victims were either farmers or shepherds or cattle traders.
While some of the victims were known in their localities as smugglers, it does not justify, in any way, their killing by the BSF. Worryingly, Chakravarty’s statement seems to suggest that, since the victims of border shootings are not innocent and mostly smugglers, their killings are justified. Such a position strikes at the very root of the concept of the rule of law, which is the fundamental principle of democracy. The rule of law requires that even the vilest of criminals cannot be punished, let alone executed, until and unless he or she is adjudged guilty by a credible court of law after a transparent public trial. The government of India, which boasts of itself as the largest democracy in the world, should know better that if a person is wrongfully punished, the rule of law is put into jeopardy.
While we acknowledge that both Bangladesh and India need to clamp down on smuggling, we believe their anti-smuggling actions should by no means encourage the border guards to assume the role of law enforcers, judges and executioners rolled into one. New Age has consistently deplored extrajudicial killings, wherever they take place, at home or abroad, and is, therefore, naturally concerned at the assertion of the Indian high commissioner, especially because of its underlying support for extrajudicial killings.
We would like to believe that Chakravarty’s comment is not representative of the official position of the Indian government and that the Indian government does not condone, let alone authorise, extrajudicial killings by the BSF. On the contrary, if the statement is indeed indicative of the mindset of the ruling coterie in New Delhi, it is bad news not only for the people of India but also for the people of the countries bordering India.
Food freakonomics
by Rashed Al Mahmud Titumir
The ideas of economists and political philosophers, both when they are right and when they are wrong, are more powerful than is commonly understood. Indeed the world is ruled by little else. Practical men, who believe themselves to be quite exempt from any intellectual influence, are usually the slaves of some defunct economist.
— John Maynard Keynes
THE ever-increasing concern expressed by the print and electronic media over, and their coverage of, the almost doubling of food price, and the associated heat in policy circles are justified; however, the underlying causes attributed to the sudden and massive upward spike are quite murky. Some of the drivers drawn from such analyses may eventually dish up the wrong solutions. The real causalities lie in ascertaining the masked interests and motivations of the do-or-die evangelical group of actors for the plight of the poor. The demystification of walking the talk needs surfing beneath the hideout of interests, and un-packaging of consequential beneficiaries of such a disastrous predicament. Such an exposition also calls for an unbundling of analytical joint-ups, which prima facie are convincing but begin to wither away after even a small fiddling around with the facts.
Paralysis of agriculture production or economics of liberalisation
The reforms in agriculture date back to the early 1980s. The first onslaught of neo-liberal reforms was on agriculture. The choice of the area for initiation of reforms was deliberate, particularly because of the near absence or weak mobilisation capacity of the farmers and agricultural labourers in most developing countries, and thus far-reaching reforms have invoked little protest. The farms in these countries are small-holding. On the contrary, the farming in the West, where the prescriptions brew, is capitalistic in nature, with large farm-households, having a stake with the politicians and direct bearing on policymaking. Hence, it is no wonder as to why those farmers enjoy such privileges and state patronage, and there is no breakthrough in agricultural trade talks.
Reforms that spawned such arrested agricultural production in the developing world were partially borrowed from the Ricardo’s theory of comparative advantage that used an example involving England and Portugal on production of wine and clothes. The principle of comparative advantage asserts that even if a country has no absolute advantage in any product (i.e. it is not the most efficient producer of any goods), the disadvantaged country can still benefit from specialising in and exporting the product(s) for which it has the lowest opportunity cost of production. The Brettonwoods Institutions suggested that the developing world should concentrate on a (or a few) commodity for production and import rest of the consumables, propagating that such reforms would reduce the price and enhance consumer surplus.
This shift in public policy, crafted through the International Monetary Fund and the World Bank’s structural adjustment reforms, has ensued abandonment of the idea of food autarky and also seen reduction in public investment in agriculture, withdrawal of subsidy, liberalisation of water, seeds, and fertiliser markets, defunctness of the state’s agricultural extension service, etc, and brewed the system of mono-cropping (a huge loss of bio-diversity and extinct of traditional crops), resulting in arrested growth of agriculture production.
The reforms, as opposed to its promised fruits, resulted in a decline in the farmer’s profitability. Our detailed empirical investigation into the profitability of farmers in Bangladesh substantiated the proposition. The decline in crop sector profitability, according to the research, can be attributed to four reasons: (a) the rate of increase in yield has been outstripped by the rate of mounting input costs; (b) the rate of increase in farm-gate price of agriculture produce is lower compared to rate of increase in the price of inputs; (c) the rate of increase in the cost of inputs is rapid, determined externally and artificially through non-market mediation, i.e. hoarding, syndicating and other means of artificial crisis; and (d) liberalisation in the agriculture sector has created an unregulated market where producers get less and traders more due to product market syndication. Producers have limited access to market. So, they sell at lower price in season but the traders have their own network to appropriate extraordinary higher price at the consumer’s end.
The consumers also never get the reduced price, due to increase in cost of production. This is due to the direct bearing of the withdrawal of subsidies, and the resultant rise in the cost of input, dumping of the western food agencies, food aid, and higher subsidies at production and export levels in those countries.
Captured supply chains or economics of predatory pricing
The food supply chains never follow the orthodox theorem that the interaction of supply and demand decides the level of price. The great examples are famines. As Amartya Sen has shown, adequate stock does not necessarily ensure predictable supply to the consumer.
Therefore, there is a need to make a distinction in tracking the price of food amongst (a) stock, (b) flow/supply, and (c) oligarchic behaviour of the ‘syndicate’ vertically and horizontally linked in and outside the country, from stockists to importers to agribusiness, which fix the price of the food.
Let us take the example of Bangladesh. The demand for rice and wheat in the current fiscal year is 2.60 crore tonnes while net production of the crops 2.59 crore, meaning a deficit of only one lakh tonne. This apart, organisations in private and public sectors have imported 34.73 lakh tonnes of grains including 21 lakh tonnes of rice from July 1 to April 24. This is 91 per cent up on the corresponding period in the previous fiscal year. During the same period, importers have opened letters of credit for import of an additional 50.56 lakh tonnes of food grains including 33 lakh tonnes of rice. Taking into account the food imports, Bangladesh should now have a grain surplus of over 33 lakh tonnes but the price has never halted (The Daily Star, May 4). This means food crisis will continue and the spike in price will last because of the predatory price-fixing mechanism.
This is also true at the global level. Rice production in Asia, Africa and Latin America is forecast to reach a record level in 2008, according to the UN Food and Agricultural Organisation, yet international rice prices are expected to remain at relatively high levels. According to the FAO, world paddy production in 2008 could grow by about 2.3 per cent reaching a new record level of 666 million tonnes. ‘Prices are expected to remain extremely firm, at least until the third quarter of 2008, unless restrictions on exports are eased in the coming months,’ the FAO said.
Certain states, compelled by agribusiness, are also engaged in two types of hoarding. Some countries have resorted to export ban or ceiling or selling at predetermined high price, besides pouring in subsidies of every form, while some other countries have piled up astronomical food reserve. For example, Japan has 1.52 million tonnes of imported rice in storage.
Similar practice of price fixing, by creating a cat and mouse game of ‘shortage’ in supply chain is marshalled by the importers, stockists, and retailers.
Myths of scarcity or supply sides economics – driving new production base (Africa)
The ‘supply deficit’, ‘increased demand’ and ‘scarcity’ need debunking and careful examination. Aggregate figures are misleading, warranting dis-aggregation at a micro-level. The demandeur for the world to do something is a mixed baggage, with different interests and persuasions. A closer look reveals the nexus (Bush, Rice, Zoellick), driven by the agribusiness corporation.
The relative profit of the agri-TNCs has in recent years either have plateaued or stagnated or are not optimum in their own terms. The Say’s law, on which the supply-side economics, a foremost neoliberal tenet, is based, instrumentally dictates the trans-national companies to find out new market to maximise profit. They are faced with different countries of the continental markets for increased production bases – North America, Latin America, Asia, and Africa. In North America, increased production requires higher continuum of subsidies, the flow of which is constrained by the present fiscal crisis in the US. In Latin America, besides the ‘spectre’ of people’s uprising, the ethanol production is more profitable, these leave the Asia and Africa. In Asia, the preponderance of small-holding agriculture is adversarial to economies of scale as transaction costs (supervision cost, administrative costs of bringing together this huge army of small-holding agriculture in a rational size, etc) are high. In Africa, the land-person ratio is high as is susceptibility to corruption in gaining allotment for commercial agriculture. Moreover, access to concessional lending is lofty (remember the World Bank group, IFC included, would double its lending for agriculture in Africa) and high-profile political elite (e.g. Kofi Anan) are in favour of another ‘green revolution’.
This calculated move of price spike is, nonetheless, orchestrated. The World Bank’s of focus for its World Development Report on agriculture is not coincidental, as Gates’ announcements and the proposed AGGRA for Africa are not. What the trans-national companies did, carefully and shrewdly, also manipulated the ‘seasonal variations’ in food supply with speculative price movement in different future markets including Chicago, in order to create thrust for increased supply, which eventually would ensure newer and increased market for hybrid seed, pesticides, water machines, and land for commercial farming, particularly in Africa.
Mockery of alternative energy sourcing or economics of rent-seeking
The US, the European Union and others are engaged, or are planning in a big way, to boost the use of biofuels, given the high prices of fossil fuel. The immediate result is decreased availability of land for crop production and resultant rise in price. One analysis beginning to emerge from the scientific community is that the amount of carbon dioxide emitted into the atmosphere of corn ethanol production is equal or more than that of fossil fuel consumption, although it was billed as a source of ‘green’ or cleaner energy leaving lesser carbon footprint.
What is not discussed regarding bio-fuels is the politics of rent-seeking. The US and the EU are faced with the proposition of reduction in agricultural subsidies at least to window dress the farm trade talks. The politicians of such countries are dependent on the campaign patronage of the huge farm lobbies; thus, they are stuck up in finding an alternative route to continue or increase the rent received by these commercial farmers and agribusiness. The corn ethanol production comes as saviour to the predicament of these politicians.
Demystifying the increased demand of India and China or economics of change in consumption
There are literature to associate a positive correlation between rise in price and increased demand. Some developed countries and a host of analysts have put the blame on developing countries, especially India and China, claiming that the latter’s growing demand for food has led to the spiralling food prices across the globe.
Let us examine. First, if income goes up, the consumption shifts from cereals to non-food (see the expenditure ratio of any developed countries vs developing countries, average spending on food is lower for the former). Furthermore, benefits of India’s current growth is heavily skewed and tilted towards those who have already been spending less on food. Second, in the case of China, consumption of meat has indeed increased; however, the consumption has been mainly concentrated to pig, which can be raised in homestead. In the Indian case, the consumption of protein has relatively increased, yet the consumption is limited to poultry, which does not require grazing fields, as they consume a relatively small portion of beef, for reasons of religiosity.
This is also borne out by statistics. According to a global food market report by the FAO, cereal consumption by India in 2007-2008 will be 197.3 million tonnes, an increase of 2.17 per cent over 2006-2007. During the same period, the US cereal consumption will increase 11.8 per cent, from 277.6 million tonnes to 310.4 million tonnes. Moreover, its share of global cereal consumption will rise from 13.46 to 14.74 per cent.
Distressed sale or economics of petty production
The small-holding agriculture is faced with liquidity crunch, and inter-locked markets (e.g. buyer providing credit to the producer and, in return, producer selling at a pre-determined price or giving share of the output), high input cost (seed, water and fertiliser) and is forced to sell the produce at a lower price. These producers have to buy the same items at a higher price from the market. A huge literature exists in relation to plights of petty producers (e.g. Henry Bernstein, Barbara Harris-White, and Prabhat Patnaik).
Vulnerability of the poor or economics of inflationary pressures and crisis in employment
The poor require both the ensuring of appropriate supplies of food and rise in purchasing power. An expansion of supplies through resorting to increased flow (either through public food distribution system, or cash transfers, increased imports of food grains) may bring some ease in ending inflation. This may be an ad hoc or emergency response. This is in no way substitute for the increased additional purchasing power in the hands of the poor. Such interventions are necessary for regaining and augmenting their real income.
The politics of agriculture as a social relation, not a sector
There is a serious conceptual lacuna. The problem should be seen not just as the stagnation of agriculture, rather as the stagnation of petty production-based agriculture. Therefore, relevant category in defining such agriculture is not sectoral but social. The problem is not merely one of increasing agricultural growth, as this is directly related to poverty, livelihood, employment and wealth generation. The stylised fact is that, in agriculture, wealth (measured in terms of contribution to the GDP) is gradually declining while the absorption of employment remaining significantly high. This means concentration of poverty in rural area, and income in agriculture is directly related to development or stagnant of the rural areas, since other sections of the rural population are dependent on farmers, as farmers or agri-labourers are the largest consumers. Thus, corporate agriculture and contract farming, as endorsed by the World Bank, should make no sense. But the problem is one of protecting and promoting agriculture, than encouraging corporate players to enter the field and promoting contract farming. Such policy interventions could have further adverse impact on the rural populace, pushing them further towards destitution.
An outline of proposals…
There is no denying that a new agriculture regime is needed. The question relates to its orientation. The instruments and institutions of delivery can be articulated if we accept the thrust of the policy elements based upon agrarian structure, power and power relations at home and abroad.
If the direction is to be towards most of the people, some elements of such a regime could be the following: (a) shift towards a system of food autarky from the current demand deflationary policy regime; (b) regulatory regime for supply chain management – limit of storage at different levels of supply chain hierarchy suiting to international and country context and enforcement of such regime; (c) shift towards a system of regenerative agriculture as opposed to green revolution agriculture through adaptive technology, use or organic fertiliser, canal digging and storage of rain water, etc; (c) increased public investment in agriculture for ensuring higher profitability of small-farmers through interventions in different markets – input (e.g. subsidised supply), output (e.g. minimum support price, food-grain storage facilities, insurance, risk smoothing), credit (increased subsidised credit through specialised agricultural bank, and labour markets (e.g. employment guarantee schemes) and creation of new institutions for regulations in pricing, revamped extension services, research and development for adaptive technology, and seed protection; (d) new public food distribution system including statutory rationing system, purchased from local markets, or loaned from the regional food bank; (e) creation of regional food bank to act as a buffer for use in emergency response, rehabilitation and reconstruction phase; (f) establishment of charter on rights of food and rights to livelihood including rights to work in just and favourable condition at regional and national level including enactment of rural employment guarantee scheme; (g) establishment of national social protection system as opposed to narrowly defined safety net to address the concerns of vulnerable and marginalised such widows, old aged, disabled, etc.
We can be more creative.
Rashed Al Mahmud Titumir is an economist. rtitumir@gmail.com
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