1
DRAFT paper @ CS_2011-09-24
High Food Prices in South Asia: Status, Impact and Solution
Chandan Sapkota, SAWTEE, 2011-09-24Abstract
: Global food prices have surpassed all thresholds recorded in the past. The food-deficitlow-income countries have been particularly hit hard by persistent rise in global food prices.Apart from negatively impacting progress made in poverty alleviation and auguring politicalinstability, it has destabilized fragile fiscal balance in several low-income countries. On thisbackdrop, this brief focuses on the status of food prices in South Asia, how they are coping withit, and lay out viable solutions, including safety net measures. While all South Asian countriesare facing high food prices, some are in more desperate situation than others. Addressing theimpact of high food prices would require both domestic and regional initiatives. At the domesticlevel, short-term (emergency food supply and safety nets) and long-term measures (structuralreform of agriculture sector) should be initiated. At the regional level, South Asian countriesshould focus on bringing into operation the concept of emergency food reserves, furtherliberalizing trade of agriculture goods, and harmonize agriculture policies and cooperation to theextent possible, among other measures.
**************DRAFT*********************
Presented at ‘South Asian Consultation on Food Justice in a Resource Constrained SouthAsia’, 26
-27 September 2011, Kathmandu, Nepal (Organized by Oxfam and SAWTEE)
2
DRAFT paper @ CS_2011-09-24
1.
Global rise in food prices
Global food prices have been rising unabated. When food prices spiked in mid-2008, the levelwas cited as being the highest threshold reached in recent memory. Unfortunately,
this year‘s
prices have even surpassed the limit reached in mid-2008 (see Figure 1). The Food and
Agriculture Organization‘s (FAO) Food Price Index (
FPI)
1
averaged 234 points in June 2011,one percent higher than in May this year and 39 percent higher than in June last year. A recentreport by the high level panel of experts on food security and nutrition states that agricultureprice volatility in the past five years has been higher than in the previous two decades, but lowerthan it was in the 1970s (HLPE, 2011).The rise in prices of food commodities is not homogenous. Prices of some food items haveincreased more than the other. For instance, currently price of sugar has been the highest of allcommodities tracked by the FAO. Sugar price declined till May 2011 and then again started torise rapidly. Price of cereals (particularly wheat and maize), dairy, and meat are consistentlyrising while that of oil and fats is stabilizing (though at an already high level compared to lastyear).The rise in world food prices after July 2010 is attributed to extreme weather events in majorfood producing countries and restrictions on grain trade, leading to higher food prices. Forinstance, Russia, the US, China and Central Asia were battered by drought. India and Russiaimposed embargo on grain export, the US and the EU saw unfavourable weather conditions andPakistan and Australia had heavy rains and floods
—
all putting pressure on food supply and thenfood prices. Currently, the Horn of Africa is facing food emergency primarily caused byprolonged droughts especially in areas struggling with conflict and internal displacement such asSomalia.
2
1
The FAO Food Price Index is a measure that tracks the monthly change in the international prices of a basket of five food commodity groups (cereals, oilseeds, sugar, dairy and meat). The index is considered as a globalbenchmark for food price trends.
2
“
Near Record High Food Prices Keep Poorest People on the Edge
.”
http://go.worldbank.org/4ENIS0R0Y0
3
DRAFT paper @ CS_2011-09-24
Moving forward, weakening of the US dollar, surge in oil prices, unfavourable weather events,commodity market fluctuations, and restrictive trade policies might further exert upward pressureon global food supply and prices.
3
Figure 1: Rising food pricesSource: FAOThe FAO predicts that high and volatile prices are likely to persist this year and in the comingyears too, primarily because of the uncertainties surrounding output in major food producingcountries and a sharp run down on inventories (FAO, June 2011b). This comes about even afterforecast of an increase in food production this year and in the future as well. For instance, cerealproduction this year is expected to be three percent higher than in 2010 (FAO, June 2011a) butprice is not expected to come down. Figure 2 shows that compared to last year, cereal price haveincreased the most of all food commodities. Cereal price is expected to remain high particularlyin import-dependent developing countries.Food prices in the long term are expected to increase further and remain volatile. A recent studyshows that the average world market price, relative to 2010 level, of processed rice would rise by31 percent in 2020 and by 73 percent in 2030 (Willenbockel, June 2011). The correspondingfigures for maize are 33 percent and 89 percent, respectively. Note that the rise in food prices is
3
http://www.fao.org/economic/est/volatility/faqs/en/
Search History:
Result 00 of 00
00 results for result for
p.
High Food Prices in South Asia_2011-09-27
High Food Prices in South Asia: Status, Impact and Solution
1.2K
Reads
2
Readcasts
17
Embed Views
More From This User
Notes
Load more
