About one billion people are undernourished in 2010 and the number of hungry people is increasing globally day by day. Rising prices of grain, meat and sugar further threaten the hungry people. The FAO estimated that although there was a decline from 1.023 billion in 2009, but still higher than before the economic crisis of 2008-09.
It is to be noted that poverty is the main cause of hunger and undernourishment. According to the Food and Agriculture Organisation (FAO, 2009) the number of hungry people worldwide rose to 963 million or 15 percent of the world population. This shows an increase of 142 million over 1990-92.
The number of hungry people in the world is rising for more than a decade, reaching to a record level in 2009 – due to economic crisis at international level and high domestic food prices in many developing countries. Food prices and food deficit in most of the low-income countries remained above the normal level that negatively affected the access to food by poor people, the FAO report indicated.
Specifically, soaring global wheat prices have resulted in a 30 percent increase in the price of bread. However, there has been two years of abundant crops around the world and the situation in global markets remained satisfactory. Wheat prices reached their highest level in about two years in August 2010 after Russia banned exports of the wheat.
Corn prices also continued to rise – hitting the highest level in nearly two years. Corn prices may fall short of expectations. The US is the largest corn producer; its Department of Agriculture reduced its yield forecast for corn this year to 162.5 bushels per acre from its August estimate of 165.9 bushels.
Russia is facing the worst drought, in more than a century – which triggered increase in wheat prices and now livestock producers are planning to pass on the higher cost of feeding their animals to consumers. It is predicted that prices would further rise 10 to 15 percent in near future.
It is projected that global wheat production would fall this year but the past years stocks of the two largest wheat harvests in history in 2008 and 2009 would help to keep a cap on prices. Moreover, global grain stocks are also at comfortable levels, due to two record crops over the past two years.
Globally, sugar prices have also been going up to their highest levels for the last six months due to fears of drought that will reduce yields in Brazil – the world’s top producer and exporter of sugar – in the next season.
In Pakistan, 2007, the rate of inflation was 12.5 percent, during 2006-07 it was 21 percent and in July-March 2010 the inflation has been 11.3 percent. The cumulative rate of inflation was 44 percent in three years, from September 2007 to September 2010.
The main reason of food prices inflation was the increase in wheat, petroleum products, electricity and gas responsible to an overall increase in prices. The rising interest rate, high remittances and depreciation of rupee against dollar also fueled the inflation. This situation directly hit the poor and increased poverty level in the country.
A shortfall in the production of some essential commodities also raised food prices. There are 13 food items in essential items’ list which also includes wheat and flour; sugar, poultry, mash pulse, meat, milk, tea, fresh vegetables etc, that account for almost 23 percent of the total weight in the Consumer Price Index (CPI). Prices of food items in general have made food dearer in Pakistan. For instance, the average price of sugar has risen above 41 percent, wheat prices by 17 percent, chicken 24 percent, beef 13 percent and onion prices by 64 percent since July 2008 over April 2009. With a 23 percent weight in CPI, the contribution of these few items to the overall CPI inflation was 18 percent.
Although the world price of sugar has fallen unexpectedly since its peak in January 2010, but it is still up 21 percent year on year (YoY) basis. Dairy prices, on the other hand, have continued to raise their upward march.
Global price increase enhanced inflation sharply and Pakistan has no exception that has affected both globally as well as domestically. India’s food price inflation soared to 19.2 percent in December 2009, 16.7 percent in March. Similarly, food inflation in Bangladesh rose from 3.3 percent in July 2009 to 10.9 percent in February 2010.
Poverty ratio in Pakistan is rapidly rising due to economic slowdown; high inflation and reduction in subsidies compel 40 percent people of the country to lives around the poverty line, as per SBP estimates.
The country’s population has jumped to 184 million in 2010, 119 million in 1990, of which 73 million Pakistanis have fallen below poverty line, SBP said. The poverty level during 2010 rises by 4 percent to 40 percent, from 36.1 percent in 2009.
In the case of Pakistan, the increase in domestic prices of essential commodities remained relatively quiet as compared to the international price movements. However, since January 2010, international prices for some of the commodities like petroleum have fallen more rapidly than in Pakistan.
To be continued [Dailytimes]
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