May 212008

By M. Osman Ghani

The Prime Minister Syed Yousaf Raza Gilani has announced 40 per cent reduction in the budget of the prime minister’s house. He said that the cabinet members would not use vehicles of more than 1600 cc and will travel in economy class only. No unnecessary lighting would be arranged on public buildings on festivities and no money would be spent on the renovation of government buildings and residences. The prime minister raised support prices of wheat from Rs510 per 40 kg to Rs625. He said that the new government had a vision, a determination and a commitment to serve the nation. He said that his government would do its utmost for the development progress and prosperity of the country, for ensuring rule of law and promoting democracy. He said the government stands by the people and it would continue to stand by them in hours of miseries and hardships. He said that the government would take steps to provide home to homeless and education to each illiterate besides generating more and more employment opportunities for the people. He said the government would not tolerate unjustified division of resources and take all the measures to provide equal opportunities to the people for their progress and prosperity.

The prime minister said that major steps would be taken to resolve the hardships faced by the people on priority basis and bring relief to the common man. The government has decided to install new power plants to reduce electricity load-shedding. To tackle acute shortages of residential accommodation of the common-man government would launch a programme to construct one million houses annually, besides five-marla scheme for rural areas and flats and low cost houses for the urban poor would be launched. Government would also focus on the improvement of health and education services along with improvement of the deteriorating environment. The prime minister emphasised for revolutionary steps to improve the vital agricultural sector, for enhancing national productivity and for improving the socio-economic status of the growers and the poor masses.

The prime minister has rightly highlighted the mounting socio-economic problems facing the nation and he has proposed for this most reasonable and workable solution. However, most of the problems highlighted by the prime minister will require persistent and long-term efforts. But the immediate issue which requires the urgent attention is to address hovering food crises for the 162 million populations. Unless the food items are made available at reasonable prices all other issues will remain subdued.

Under the prevailing national and international situation especially in respect of growing prices of crude oil, edible oil and almost all food items Pakistan cannot afford to remain a silent spectator. It must remain vigilant and alert to avert any future food crisis leading to uncontrollable shortage and further price spiral. The following paragraphs highlight the possible supply shortages of vital and strategic food items.

Some of the news on international food situation is quite alarming. An increasing number of food exporting are now importers of various food items or are going to import in the near future. The perennial food importing countries in the past are now doubling or tripling their food imports. For example, Bangladesh, which used to import around 1-2 million tons of food grain in the past now plans to import 3 million tons this year including 1.5 million tons of wheat and similar quantity of rice. Due to reduction in production and stock of various food items, India is reportedly importing huge quantities of rice, wheat etc. Export of rice from India is likely to fall from 5.50 million tons in 2007-08 to a mere 0.25 million tons in 2008-09. Due to a devastating winter just encountered by China it also plants to import more food grains. Moreover, to meet the rapidly growing standards of living of its urban population, China will surely increase the imports of various food items from various sources.

This world is likely to experience growing shortage of food, energy and other essential commodities to meet the demand of the growing population, rapid industrialisation and rising standard of living in many countries of Asia, Latin America and Eastern Europe. Bulging population growth the voracious use of the earth’s resources is leading to unprecedented crises including environmental crisis.

Many countries, including Brazil, USA and Malaysia are now diverting grain and oilseed crops from dinner plates to fuel tanks. Bio-fuels are already jacking up world food prices and endangering the poor and the hungry of the third world. Harvests are being plucked to fuel cars instead of human being and the cattle. Soaring corn prices had sparked tortilla riots in Mexico City and sky rocketing flour and other food items prices pose to destabilising many countries including Pakistan. In recent months the commodity prices of rice, wheat and corn has jumped 50 per cent or more, pushing retail prices of levels unseen in a generation and prompting grain-exporting countries to curtail trade to suppress domestic inflation.

The import bills of eatable items in Pakistan reached the highest-ever level of $2.04 billion in the first seven months of the current fiscal year compared to $1.73 billion in the same period last year. The food import bill has witnessed unprecedented growth which is not good for a predominantly agricultural country like Pakistan. By the end of June, 2008 the import bill of food items alone could reach $3.5 billion, mainly owing to rising international prices particularly of edible oil, wheat, rice and pluses. As mentioned above, international prices of various food items may record further increase in future. Therefore, Pakistan should redouble its effort to become self sufficient in vital food item on the one had and one the other it must plug various loopholes of mismanagement and rampant corruption in the food markets. Pakistani consumers are already encountering unprecedented supply constraint and price-hike of vital food items. The second quarterly report of the SBP presented a dismal economic picture of the country for the current fiscal year including higher than targeted inflation and lower GDP growth. Food inflation has now emerged a critical and a burning issue for the country.

The table below shows quantum jumps in the prices f some essential food items. Despite being a leading procedure of wheat and rice, price of wheat has increased by about 43 per cent during July – March 2007 -08. Similarly prices of Basmati and Irri-6 rice have increased by 26.6 per cent and 27.9 per cent respectively during the same period. While price of masur has increased by 70 per cent. Prices of vegetable ghee and cooking oil have also recorded increases in the range of 38.6 per cent to 48.6 per cent per kg. If this trend of price-hike continues most of the essential food items will go beyond the reach of the common man.

Some food hungry countries have already shown willingness to buy whatever food surplus is available in Pakistan. On the other hand, reports are pouring in from various sources that the food blow of Pakistan, the Punjab, is likely to produce less wheat this year. The prices of Irri rice are already surging in the international market. Taking undue advantage of the crisis situation our unscrupulous profiteers and hoarders have raised Irri prices by Rs3000 per ton just within 3 days in the first week of April.

The clear lesson for the government is that it should not only stop export of any food item to other countries, but it must also effectively manage the supply situation and stock situation, especially of vital food items. Hoarders, profiteers and smugglers who are bent upon to play with the destiny of poor consumers need to be controlled at any cost.

Source: The News, 19/5/2008

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 Posted by at 10:21 pm

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