Crisis in food price, food security imperil the marginalised

Sharp increases in food prices over the past few years have eroded the purchasing power of households and raised serious concerns about food insecurity and malnutrition in many countries, including Bangladesh. This decline in turn represents a serious erosion of progress towards meeting many of the Millennium Development Goals, including those aiming to reduce poverty, hunger and malnutrition of children and women, write AZM Saleh, Jayanta Kumar Basak,
KM Mustafizur Rahman and Fawzia Rafique

FOOD security of the nation is currently at stake due to the skyrocketing price of essential food commodities which leaves major impacts particularly on the marginalised sections of the society. Recent rise in the cost of production of food in the domestic market, together with high price of food and oil in international market, may lead to further food inflation, leaving adverse effects on the poor. Moreover, half of the income of most of the poor people is spent on food. Price hikes for essential commodities can force them not only to cut back on the quantity or quality of their food intake, but also change their consumption patterns. This may result in food insecurity and malnutrition, with adverse implications in both short and long term. Consequently, sky-high food prices might not only make the lives of the poor miserable, but also could drag down many people below the poverty line.

From the beginning of the financial year 2010-11, the prices of essential commodities have been on an upward curve due to food related inflation. Food inflation has crossed the double digit figure in December 2010 (11.01 per cent) and reached 14.36 per cent by April 2011 (Bangladesh Bureau of Statistics and Bangladesh Bank, 2011). The direct result of such food inflation is drastic price hike of essential commodities. Before the current spike, the price of essential commodities in 2008 was the highest of the decade, which started to decline in 2009. The first half of 2011 witnessed a higher price hike that left the spike of 2008 far behind.

If 2005 is taken as base year, the 2011 food prices scenario becomes a matter of shock and awe. An Unnayan Onneshan analysis shows that the prices of all kinds of rice (coarse, medium and fine) have nearly doubled in 2011 since 2005. The prices of soybean and palm oil increased, relative to 2005, by 118.36 and 146.15 per cent respectively by June 2011. In 2005, the price of garlic was Tk 54 per kilogram, which increased by 168.52 per cent by June 2011 and the price at present stands on average at Tk 145 per kilogram. The prices of different types of pulses have also increased over the years at a staggering rate. The prices of baby food items, powdered milk and sugar are also on an upward trend. The prices of most of the essential commodities are on the rise in January-June 2011 compared to the same period in 2010. Edible oil is at the top of the list of price hike as it has increased by more than 30 per cent (soybean 33.75 per cent and palm oil 39.13 per cent) since 2010. The price of coarse rice and ‘ata’ has increased by 10.34 and 30.43 per cent respectively.

To keep prices of staples the within accessible limit of the poor and to maintain fair price for the local farmers is a twofold challenge for the present government. The cost of boro rice may increase further by Tk 1.30 to 1.50 per kilogram due to increased cost of production of paddy by Tk 0.90 per kilogram because of the increased price of urea fertiliser by Tk 8 per kilogram and diesel price by Tk 2 per litre. Aman paddy production cost may also increase by Tk 0.70 per kilogram, and as a result price of aman rice may witness an increase of Tk 1 to 1.20 per kilogram. Moreover, the government has decided to procure 0.60 million tonnes of rice for Tk 29 per kilogram during Boro season in FY 2011-12. But, it would be very difficult to achieve this target. According to the set price of rice (Tk 29 per Kg), farmers will get a benefit of only Tk 131.28 from one bigha of land.

The poor has to suffer a lot due to price hike of essential commodities in the local market. It will result into high dropout rate of boys for helping their families in income generation. The dropout rate of boys was 6.11 per cent higher than girls in 2005 and 6.88 per cent higher in 2010 (HIES, 2005 and 2010). The main matter of concern for the education sector is the increasing dropout rate of boys in recent years. Among the non-poor families, only 8.89 per cent of boys dropped out in 2010 from the age group of 11-15 years, however, 17.48 per cent dropped out from poor families, which is a clear sign of inequality. The reason might be that the poor families engage their boys in income generation activities to cope with the food price hike.

The impact of price hike of essential commodities on high- and low-income groups is different because of different consumption levels and patterns. The main cause of the high inflation today is cost push, fuelled by rise in prices of food, which accounts for the largest part of poor people’s consumption. Increased trends of rice and wheat price have resulted in decreased consumption of these two staple food items, which, combined, was 442.21 grams in 2010 and 451.72 grams in 2005, showing a decrease of 9.51 (2.13 per cent) grams per capita per day during this period (HIES, 2010). The increase in food and non-food prices erodes the purchasing power of the poor. The poor women both in urban and rural areas have to suffer a lot due to high food and non-food prices. The urban women slum dwellers, female headed households and rural poor women are more vulnerable.

Sharp increases in food prices over the past few years have eroded the purchasing power of households and raised serious concerns about food insecurity and malnutrition in many countries, including Bangladesh. This decline in turn represents a serious erosion of progress towards meeting many of the Millennium Development Goals, including those aiming to reduce poverty, hunger and malnutrition of children and women. The MDG target related to the nutritional status demands the percentage of the underweight children reduced to 33 by 2015. The percentage of the underweight children in Bangladesh decreased from 47.7 in 1999-2000 to 41 per cent in 2007 at an annual rate of about 2 per cent. Another MDG target related to women’s nutritional status is to reduce the percentage of thin or malnourished (Body Mass Index<18.5) to less than 20 by 2015. The percentage of the thin or malnourished women in Bangladesh decreased from 45.4 in 1999-2000 to 29.7 in 2007 at an annual rate of about 5 per cent. The rising food prices might largely hamper the current rate at which it is decreasing.

In addition, there exists a positive relationship between food inflation and poverty. As food inflation increases, an additional number of people go under the poverty line. People living below poverty line in 2000 were 55.8 million when the food inflation was 2.68 per cent. This rate of food inflation increased to 7.91 per cent in 2005 and at the same time another 0.2 million people newly went under poverty line. Therefore, the most affected section of the society due to price hike of the essential commodities is the marginalised one. Hence, policymakers should emphasise more on food price hike to alleviate poverty and build Bangladesh into a middle income country.

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AZM Saleh, Jayanta Kumar Basak, KM Mustafizur Rahman and Fawzia Rafique Laboni are researchers at policy research organisation Unnayan Onneshan.