People spend almost of their income on food have been priced out, as price of maize, wheat, corn, rice and other commodities that make up the world’s basic foodstuffs is soaring the poorest people in the poorest countries are the hardest hit. And as prices shoot up helping them is getting tougher too.
For many years the least developed nations have worried about food security, especially countries at war and those battling droughts and other climatic hardships. Meanwhile the world’s richest nations have produced more than enough for their needs and spent more time and effort worrying about the problems related to an abundance of food. These range from the health risks associated with ballooning rates of obesity to subsidies for uncompetitive farmers.
Until few years ago we had too much food, but it was badly and unequally distributed, About a hundred million people, mostly women and children, remain chronically hungry while another million are obese or overweight.
Food is scarcer now thanks to market liberalisation, which helped to cut excess production and lower stocks. At the same time demand for grains and other food commodities has shot up. The biofuel industry is gobbling up an increasing share of the corn and sugar crops. Floods and droughts around the world destroyed much of the harvest.
Concern about the cost of food is even spreading beyond the world’s poor countries. They are eating less too. Efforts to find solutions have been complicated by political manipulation.
This month the Arroyo government want to introduce a noodle. An efforts to alleviate one problem, finding an alternative to oil, has brought strong condemnation from a proponent of another, feeding the country’s starving poor. Her presidential expert on the right to food, calls the growing use of crops to replace Jatropa as a crime against humanity and wants a moratorium on biofuel production.
Periods of high prices followed by times of low prices are common in agricultural markets. What makes the current cycle different from previous periods of high prices is the rise has hit nearly all food commodities. In the past, farmers producing a plentiful crop attracting low prices would switch to one in shorter supply that would earn them more. And stocks are so tight at the moment that there is not much of a buffer if bad weather next year effects crops again.Prices will probably remain high for the coming years while the country is adapting to food scarcity. What happens next will reveal the resilience of the country’s food-supply system and the effects on the country’s poorest and hungriest could be devastating.
Philippine shortage of rice supply which showed consumer prices rising at their fastest rate in a decade, have stimulated intense debate about the nature of the inflationary pressures now emerging in the country and about whether the threat from inflation is becoming more serious.
On the other hand, rapidly rising food costs are, in themselves, cause enough for policymakers to be concerned. Philippines has long worried about food security, and the strong impact of rising food costs on the welfare of most of the population, particularly the poor, creates evident potential for social unrest. The prevailing assessment that the current surge in inflation reflects developments in the farming industry risks masking broader trends that have the potential to complicate efforts to restrain price growth. When food prices are rising , the risk that they could stoke public discontent becomes a very real concern for officials.
Demand aside, there have also been important developments on the supply side. The surging demand for crops that can be used as biofuels may be playing a part in cutting the supply of other agricultural products, as farmers switch land into the newly profitable grains. Some grain-producing regions have also been hit by drought, and others by floods, although this has not been an unusually bad year. More importantly perhaps, costs for agricultural producers are rising very rapidly. In particular, high global oil and gas prices are gradually feeding through into increased costs for related products like fuel and fertilizer. Farmers are now passing these expenses to consumers.
The outlook for rising food price in the short term is not as gloomy as this picture might suggest. Agricultural production is usually responsive to price movements, so higher prices should begin to feed through into higher output, in turn bringing supply up and prices down. As a result, prices for food should fall back ..
However, underlying these short-term developments are more worrying medium-term trends. Agricultural land supply is falling as more is converted for industrial use and as farmers leave the land to work in the cities. Utility-price rises, postponed for now, will have to be implemented if the government is to stand any chance of achieving the energy and water efficiency improvements that it has publicly committed to. The regulatory burden on businesses is also likely to be steadily ratcheted up, creating additional compliance costs.
Rising labor shortages will pave the way for even stronger wage growth, even as the government channels more funds to the poor. Coupled with all of this is a suspicion that official statistics may currently understate consumer price inflation owing to problems with the basket of goods used to measure prices, opening the way for possible upward revisions in the future. The government will have to hope that its monetary policy develops more traction before these forces start to gather momentum.
These problems are not given adequate attention by Arroyo government, it becomes very clear that this is a major issue.Philippine governments should focus more on developing farming, which not only provides food but helps improve incomes in rural areas where many of Filipino’s poor live.It’s important to build up infrastructure, to build up institutions to allow these people to participate in the country’s economy, to take benefit from the higher prices that are coming from agricultural goods to produce new products, both for domestic consumption but also for export. Arroyo governments who subsidise biofuels production did not significantly reduce emissions of greenhouse gases, and hurt poor by contributing to food price rises.
This article is written by my daughter who is a freshman in University of California.