Bracing for the hard days ahead
Tuesday, 27 November 2007
Syed Fattahul Alim
PRICE of food grains have been an issue of national concern since long. A lot has been and is being written about the runaway price hike of daily essentials. Has the issue then become a hackneyed topic that does not merit further discussion? Not in the least. Essential commodities are an issue of life and death for the majority of the population. As long as the price regime of these articles of daily consumption remains volatile, the issue, far from losing its importance, will continue to grab public interest. What is more, the post-cyclone reality has created further reasons for concern about the food grains market and the behaviour of the price curve corresponding to the new situation.
Under the circumstances, further treatment of the issue on the print and electronic media is still necessary in order to keep the stakeholders engaged on the subject.
It is not surprising then that the print and the electronic media are carrying reports on public sufferings and concerns in the cyclone-hit areas, the damage inflicted by the storm to the aman paddy and the winter crops. Analytical articles are being published in the newspapers and talk shows being held on TV channels attended by the members of the business community, the government and members of the intelligentsia on the yet another dimension the cyclone has added to the old problem. They are discussing endlessly to comprehend the situation and to find, if possible, any way out of this ever precipitating crisis. Is there any light at the end if the tunnel?
No end of theories has been put forward to explain the galloping price of food grains and related items in the local market both before and after the cataclysm. The price situation is getting from bad to worse with each passing day. It is has turned into as if a noose, which is fast getting tighter, around the neck of the common man.
Though the upward trend in the prices of daily essentials is a permanent feature of the local market, this time, as never before, it has struck a feeling of insecurity and fear in the minds of the common people. What does this extraordinary situation foreshadow? The finance adviser the other day said that the escalating price of daily necessaries promises little hope that it will come down in the near future. So, the dim hope that was still alive in the heart of the people has been done for with this utterance of the person who is in the know of what is really ailing the market.
Is the crazy behaviour of the essentials price spiral merely a local phenomenon or does it have a yet broader, even global, significance?
Let us have a look at other parts of the world to see if the market situation of the essential commodities is a purely local phenomenon or it is a global issue of concern.
This year the price of rice in the global market has increased by 16 per cent and that of wheat by 50 per cent. This is a rare coincidence that the price of these two items may fly so high like this in tandem. Even the prices of barley and maize are the highest this year in a decade. The price of poultry items has also increased by 10 per cent.
According to a WFP estimate, about 854 million people all over the world are living from hand to mouth. Another UN estimate says that in the last 35 years, the global food stock situation has reached the lowest point in the current year.
Of the many reasons behind food price hike, skyrocketing oil price is the main driving force behind this situation, contends the Food and Agricultural Organisation (FAO) of the UN. The oil price has now neared $100 per barrel. This vital item for modern life is now the priciest item compared to anytime in the past. This year the price of fuel oil has about doubled. Soaring oil price has contributed to increasing the import cost of food items on a global scale.
According to FAO, in the current year the cost of import of various goods has been about US$745 billion, which is 21 per cent above the previous year. The entire cost of import has been added to the cost of food items.
As a result, the cost of food items has increased between 25 and 30 per cent on an average in the international market. Increase in oil price has forced many countries including USA to look for bio-fuel. The USA is using one third of its soybean and mustard seeds for producing bio-fuel. Indonesia and Malaysia which are rich in palm oil have also taken a similar path. As result, the market of edible oil has been galloping upwards. The high price of edible oil has driven the cost of food items prepared with oil further upwards.
The skyrocketing fuel oil price has left its knock on effect on everything that modern life needs. This is the basic factor that lies behind the irrational and stubborn rise in the price of essentials in the global market. Being basically an import-dependent economy, the impact of oil price-induced cost-push has left its worst impact on our economy. But it is also not only oil that has left its harmful influence on the price of goods including the essential ones in the global market. Other factors like climate change and political instability have also their influence on the market.
Climatic change has been impacting negatively on agricultural production in different parts of the world. Crop failures are contributing to reducing global food stock. As a result, there is always remaining a gap between the demands and supply of agricultural produces in the international market.
Volatile political situation across the globe is another issue of serious concern that has also been playing its part in, as it were, a global intrigue to keep the people forever on a tenterhook. There is no sign of improvement in the situation in the near future. The civil war in Iraq, the unresolved Palestinian issue, the continued war in Afghanistan, the impasse between Iran and the West led by the USA over the nuclear issue and the rise of militancy across the globe have made the world a more unstable and unsafe place. Instability on the political front has its domino effect on the overall situation including the market. If America attacks Iran, the situation will get worse and precipitate the crisis further. That eventuality will lead to further increase in oil price and as an upshot on the entire chain of things leading to the market of essential commodities globally.
Bangladesh is not an isolated place. Moreover, it is an overwhelmingly import-dependent economy. Is there any way out of this situation with its global significance?
In fact, there is not much hope for now. But that should not also be any cause for alarm. Here the government has its best role to play. The need for government intervention in the economy is most desired exactly at such moments in the history of a nation. Though the government has not much to do so far as the price of the commodities is concerned, it must at least create the safety nets so that the poor and the limited income group may survive the hard times ahead. At the same time, adequate food stock has to be built up to avoid future food crisis. It must be kept in mind that a silent famine situation is prevailing in many parts of the world. What is the real picture of the situation in Bangladesh? Emergency measures need to be taken before the situation gets out of control.
PRICE of food grains have been an issue of national concern since long. A lot has been and is being written about the runaway price hike of daily essentials. Has the issue then become a hackneyed topic that does not merit further discussion? Not in the least. Essential commodities are an issue of life and death for the majority of the population. As long as the price regime of these articles of daily consumption remains volatile, the issue, far from losing its importance, will continue to grab public interest. What is more, the post-cyclone reality has created further reasons for concern about the food grains market and the behaviour of the price curve corresponding to the new situation.
Under the circumstances, further treatment of the issue on the print and electronic media is still necessary in order to keep the stakeholders engaged on the subject.
It is not surprising then that the print and the electronic media are carrying reports on public sufferings and concerns in the cyclone-hit areas, the damage inflicted by the storm to the aman paddy and the winter crops. Analytical articles are being published in the newspapers and talk shows being held on TV channels attended by the members of the business community, the government and members of the intelligentsia on the yet another dimension the cyclone has added to the old problem. They are discussing endlessly to comprehend the situation and to find, if possible, any way out of this ever precipitating crisis. Is there any light at the end if the tunnel?
No end of theories has been put forward to explain the galloping price of food grains and related items in the local market both before and after the cataclysm. The price situation is getting from bad to worse with each passing day. It is has turned into as if a noose, which is fast getting tighter, around the neck of the common man.
Though the upward trend in the prices of daily essentials is a permanent feature of the local market, this time, as never before, it has struck a feeling of insecurity and fear in the minds of the common people. What does this extraordinary situation foreshadow? The finance adviser the other day said that the escalating price of daily necessaries promises little hope that it will come down in the near future. So, the dim hope that was still alive in the heart of the people has been done for with this utterance of the person who is in the know of what is really ailing the market.
Is the crazy behaviour of the essentials price spiral merely a local phenomenon or does it have a yet broader, even global, significance?
Let us have a look at other parts of the world to see if the market situation of the essential commodities is a purely local phenomenon or it is a global issue of concern.
This year the price of rice in the global market has increased by 16 per cent and that of wheat by 50 per cent. This is a rare coincidence that the price of these two items may fly so high like this in tandem. Even the prices of barley and maize are the highest this year in a decade. The price of poultry items has also increased by 10 per cent.
According to a WFP estimate, about 854 million people all over the world are living from hand to mouth. Another UN estimate says that in the last 35 years, the global food stock situation has reached the lowest point in the current year.
Of the many reasons behind food price hike, skyrocketing oil price is the main driving force behind this situation, contends the Food and Agricultural Organisation (FAO) of the UN. The oil price has now neared $100 per barrel. This vital item for modern life is now the priciest item compared to anytime in the past. This year the price of fuel oil has about doubled. Soaring oil price has contributed to increasing the import cost of food items on a global scale.
According to FAO, in the current year the cost of import of various goods has been about US$745 billion, which is 21 per cent above the previous year. The entire cost of import has been added to the cost of food items.
As a result, the cost of food items has increased between 25 and 30 per cent on an average in the international market. Increase in oil price has forced many countries including USA to look for bio-fuel. The USA is using one third of its soybean and mustard seeds for producing bio-fuel. Indonesia and Malaysia which are rich in palm oil have also taken a similar path. As result, the market of edible oil has been galloping upwards. The high price of edible oil has driven the cost of food items prepared with oil further upwards.
The skyrocketing fuel oil price has left its knock on effect on everything that modern life needs. This is the basic factor that lies behind the irrational and stubborn rise in the price of essentials in the global market. Being basically an import-dependent economy, the impact of oil price-induced cost-push has left its worst impact on our economy. But it is also not only oil that has left its harmful influence on the price of goods including the essential ones in the global market. Other factors like climate change and political instability have also their influence on the market.
Climatic change has been impacting negatively on agricultural production in different parts of the world. Crop failures are contributing to reducing global food stock. As a result, there is always remaining a gap between the demands and supply of agricultural produces in the international market.
Volatile political situation across the globe is another issue of serious concern that has also been playing its part in, as it were, a global intrigue to keep the people forever on a tenterhook. There is no sign of improvement in the situation in the near future. The civil war in Iraq, the unresolved Palestinian issue, the continued war in Afghanistan, the impasse between Iran and the West led by the USA over the nuclear issue and the rise of militancy across the globe have made the world a more unstable and unsafe place. Instability on the political front has its domino effect on the overall situation including the market. If America attacks Iran, the situation will get worse and precipitate the crisis further. That eventuality will lead to further increase in oil price and as an upshot on the entire chain of things leading to the market of essential commodities globally.
Bangladesh is not an isolated place. Moreover, it is an overwhelmingly import-dependent economy. Is there any way out of this situation with its global significance?
In fact, there is not much hope for now. But that should not also be any cause for alarm. Here the government has its best role to play. The need for government intervention in the economy is most desired exactly at such moments in the history of a nation. Though the government has not much to do so far as the price of the commodities is concerned, it must at least create the safety nets so that the poor and the limited income group may survive the hard times ahead. At the same time, adequate food stock has to be built up to avoid future food crisis. It must be kept in mind that a silent famine situation is prevailing in many parts of the world. What is the real picture of the situation in Bangladesh? Emergency measures need to be taken before the situation gets out of control.