Food price hike: Investment is the answer

Reaz Ahmad

FOOD prices are soaring like wildfire, and showing no sign of coming down. It appears from the volatile domestic food market that no price ceiling is enough, and prices are surging almost on a daily basis. Market forces are determining the prices and a last-ditch government effort to rope in spiraling soybean price by fixing a maximum ceiling has also fallen flat. The market is behaving erratically, and prices of most necessary food items are rising by one or two taka every day. The unabated food price hike has gone so far that it has become a question of survival for a vast majority of the impoverished Bangladeshi population. By no fair means are they able to cope with the situation. No longer can they afford to buy foodstuffs to the amount fulfilling their requirements and, at the same time, the scope for employment for scaling up income level has shrunk too, thanks to imprudent closures of mills and factories in recent times. In managing their low-level family budget, if the poor and ultra-poor continue to compromise with their daily food needs by taking less at each meal, we'll end up seeing a huge rise in the ranks of the malnourished and unproductive. Because we badly lack constant vigilance over the market, concerted market monitoring mechanisms and domestic and international price analysis mechanisms, all stop-gap arrangements to subdue the price spiral, have largely become futile. Given the enormity of the problem and vastness of the number of affected people, the stop-gap arrangements, at best, can provide some cosmetic affects, not a solution in totality. As the caretaker regime is faced with such a challenging situation, there is no good news from the West either. Food-wise, the whole world is now poised on a tight rope. The United States government's humanitarian relief agency is significantly scaling back emergency food aid to some of the world's poorest countries this year because of soaring global food prices, and the US Agency for International Development (Usaid) is drafting plans to reduce the number of recipient nations and/or the amount of food provided to them. Usaid officials said that a 41% surge in prices of wheat, corn, rice, and other cereals over the past six months has generated a $120 million budget shortfall that will force the agency to reduce emergency operations. That deficit is projected to rise to $200 million by year's end. Prices have skyrocketed as more grains go to bio-fuel production or are consumed by such fast-emerging markets like China and India.On March 1, the Washington Post quoted the UN World Food Program Executive Director Josette Sheeran: "Look at what's happened to wheat prices alone -- they shot up 25% in one day last week. This is really the first emergency we've faced without a drought, war, natural disaster. We will have to cut the amount of people being served or the amount of food being served if we do not get more funds." So, gone are the days when poor countries having low grain productivity could rely on food aid and imports. As global food productivity is on the wane, having enough money in hand to buy food will not guarantee food security in future. We need to put all our resources and technologies into growing our own food instead of depending on imported food or donated food. The more we invest on agricultural development the more we'll be able to reap the benefits in terms of greater grain output, thereby defusing our food insecurity to a large extent. Unless we invest enough on crop diversification, breed and seed development, bio-technological advancement and soil fertility, we will remain prone to vulnerability in terms of food security and have to depend on food aid and food import, which we can ill afford. Lest we forget, almost half of Bangladesh's children are underweight, whereas our MDG targets include reducing the number of underweight children to 34% and halving the proportion of people suffering from hunger and malnutrition by 2015. The hungry population of over 60 million in Bangladesh is larger than it is in most other countries -- the third largest poor population in any country after China and India. While we've successfully doubled our grain output over the last three decades, nearly half of Bangladesh is still far from being food secure. And the driving force behind the growth -- the tools and techniques of the Green Revolution -- has reached a plateau. The challenge of growing more food gets bigger every day -- we're losing 82,900 hectares of cropland each year while adding two million new mouths. In the early 1970s, the population was 70 million and population growth rate was over 3%, resulting in annual rise in population of 2 million. Now the population growth rate is 1.5%, thanks to a vigorous birth-control campaign, yet 2 million people are still being added each year due to the large population base -- over 140 million. As our government is trying hard to offset the rising food prices and seeking every avenue to keep prices to the level people can afford, it's high time it also does soul-searching regarding its investment portfolio on agricultural development. We have to ask ourselves: are we doing enough to enhance grain output? The World Bank and the FAO recommend investing 2% of GDP in farm research and development, whereas Bangladesh invests a meager 0.2%. There are as many as 27-food security and social safety net programs (SSNPs) in Bangladesh, but the coverage is inadequate. SSNP allocation is less than 1% of GDP in Bangladesh; much less than the average allocation of 5% of GDP in South Asia and even less than 2% of GDP allocation in sub-Saharan Africa. Unless we invest more in these areas how can we expect our marginal population to cope with the global and domestic trend of food price hike? Our National Food Policy (NFP) 2006 envisages 3 principal objectives: a) adequate and stable supply of nutritious food at affordable prices, b) increased physical, social and economic access and purchasing power, and c) adequate nutrition for all individuals, specially women and children. Are we anywhere near attaining these objectives? Investment is the ultimate answer if we are to achieve the goals set in NFP 2006. Our annual rice import bill is enough to develop homegrown farm-tech to offset output deficit, and our yearly expenditure on chemical fertiliser import is enough to set-up a new urea factory at home. What we lack is a clear vision and priority setting.