Price of food and poverty
Saturday, 8 November 2008
Enamul Haque
Participants in a recent workshop organised in Dhaka observed that the positive trend of steady drop in poverty that Bangladesh attained during the first half of the current decade, until 2005, with a reasonable and uninterrupted economic growth of around 6.0 per cent, was broken during the last two years.
Inflation, specially in the prices of basic staples, of last two years was identified as the main cause for the lapse. The participants in a number of other workshops, seminars and symposia also held in the capital city, have likewise been maintaining more or less the same view. Poor households have to spend one-fifth of the income on food. This aspect of the food price-related aggravation of poverty is significant. But the evaluation should have taken into account other developments peculiar to the Bangladesh, where food price feeds inflation.
Traditionally, prices of all basic goods and services for survival in Bangladesh is vitally linked to the price of rice. Whenever rice price goes up, the prices of essential goods and services also go up. Automatically, a rickshaw puller abnormally raises fare to be able to pay for the basic food for survival.
Therefore, inflation management and poverty alleviation strategies need to address this core issue of food price-induced inflation. Policy supports must be ensured to help maintain the foodgrain prices at a stable level. The greatest number of the poor must be able to afford food to prevent poverty aggravation. The government has expanded its social safety net this year to provide foodgrain at below the market rate to the poor. The programme needs to be not only very efficiently run but it is important to expand it to cover a much greater number of the poor than before.
But the government must also make consistent efforts in a determined manner to help improve the supply of inputs for agricultural production to farmers in time and at affordable prices. The subsidies to farmers should be maintained and improved. These activities would be of great value to keep production costs low. This in turn would help lower foodgrain prices to decelerate the food-price induced inflation.
Participants in a recent workshop organised in Dhaka observed that the positive trend of steady drop in poverty that Bangladesh attained during the first half of the current decade, until 2005, with a reasonable and uninterrupted economic growth of around 6.0 per cent, was broken during the last two years.
Inflation, specially in the prices of basic staples, of last two years was identified as the main cause for the lapse. The participants in a number of other workshops, seminars and symposia also held in the capital city, have likewise been maintaining more or less the same view. Poor households have to spend one-fifth of the income on food. This aspect of the food price-related aggravation of poverty is significant. But the evaluation should have taken into account other developments peculiar to the Bangladesh, where food price feeds inflation.
Traditionally, prices of all basic goods and services for survival in Bangladesh is vitally linked to the price of rice. Whenever rice price goes up, the prices of essential goods and services also go up. Automatically, a rickshaw puller abnormally raises fare to be able to pay for the basic food for survival.
Therefore, inflation management and poverty alleviation strategies need to address this core issue of food price-induced inflation. Policy supports must be ensured to help maintain the foodgrain prices at a stable level. The greatest number of the poor must be able to afford food to prevent poverty aggravation. The government has expanded its social safety net this year to provide foodgrain at below the market rate to the poor. The programme needs to be not only very efficiently run but it is important to expand it to cover a much greater number of the poor than before.
But the government must also make consistent efforts in a determined manner to help improve the supply of inputs for agricultural production to farmers in time and at affordable prices. The subsidies to farmers should be maintained and improved. These activities would be of great value to keep production costs low. This in turn would help lower foodgrain prices to decelerate the food-price induced inflation.