Global crisis grows as food prices soar
What's considered largely an irritation in the U.S. threatens worldwide social upheaval as hunger strains poor nations

By Laurie Goering | Tribune correspondent

NEW DELHI — To support his family of six, Raju sells plastic packets of chilled water to commuters on a New Delhi roadside. Like many Indians, he normally spends more than half of his monthly income to buy food.

But over the past year, as world food prices have soared and inflation began creeping up, the rice, lentils and wheat his family needs have begun to take as much as 70 percent of his meager monthly salary of $77. With the other 30 percent of the family's income committed to rent, they have had to give up buying vegetables—meat and milk have never been affordable—and will simply have to go hungry if prices rise any further.

"We're barely managing," said the 36-year-old, who goes by only one name.

With India's inflation hitting 7 percent, "I don't see any improvement coming," he said. "There will be riots if this gets worse."

As global food prices race upward, no place demonstrates the growing risks to the planet as much as India — home to more than half of the world's hungry.

Worldwide, food prices have soared 45 percent over the past year as surging oil prices make growing and transporting food more expensive and as economic growth in emerging giants such as China and India leads to rising demand for food, according to the United Nations' Food and Agriculture Organization.

Ramped-up production of biofuels, particularly in the U.S., also is taking an increasing share of the world's food production, and droughts and floods possibly linked to global warming have slashed harvests in leading grain producers such as Australia.

In richer developed nations, where people spend an average of 10 to 15 percent of their disposable income on food, price hikes have been a growing irritation. But in the developing world, where most poor people spend at least half of their income to eat, rising costs threaten to create major social unrest.

In Haiti, at least five protesters were killed last week after hungry mobs tried to storm the presidential palace, and on Saturday lawmakers voted to dismiss the country's prime minister. Food riots have also flared across Africa's Sahel and in Mexico, Uzbekistan and Morocco. Egypt's government has put the army to work baking subsidized bread.

'No margin for survival'
All told, 33 countries around the world are at risk of social upheaval as a result of acute increases in food and energy prices, said Robert Zoellick, president of the World Bank, in a speech this month. In countries where buying food requires half to three-quarters of a poor person's income, "there is no margin for survival," he warned.

UN officials said Friday that the problems are likely to persist despite an expected increase in global cereal production over the next year.

"All indications we have is that this is not a short-term effect," Jacques Diouf, director general of the Food and Agriculture Organization, said at a news conference in Rome.

India, which has more malnourished people than anywhere else in the world—even more than sub-Saharan Africa in both absolute and percentage terms—is so far not counted among the countries most in danger.

Largely that's because its government runs the world's biggest food aid program, an $8.4 billion effort that pushes 15 million tons of subsidized wheat and rice a year to hundreds of millions of people. The United Nations' World Food Program, the world's biggest food relief aid agency, by comparison, ships just 5 million tons of food a year to 73 million hungry people at a cost of $3.4 billion, WFP officials said.

India also enjoys an impressive economic growth rate of better than 8 percent a year, deep cash reserves of $300 billion and near-self-sufficiency in basic grains, all of which have helped insulate it from the world food price shock.

But India has the potential to play a big role in accelerating the world's developing food crisis. With its population and its per capita demand for food growing faster than its agricultural productivity, the nation of 1.1 billion is edging toward becoming a net importer of food, a reality that could turn the current spikes in international food prices into consistent highs for a decade or more as demand grows, analysts say.

India, the world's biggest rice producer after China, is also a major exporter of rice to Bangladesh, one of the poorest and most vulnerable nations in the world. Its decision late last month to ban exports of all but high-priced basmati rice could eventually hit hard at Bangladesh and other hungry neighbors, which may be forced to start importing food at prices higher than those they pay to India. So far Bangladesh has received a limited exemption from the export curb.

Inflation hurting Indians
Inside India itself, inflation is eroding the buying power of millions of people like Raju with little ability to pay more for food. That is a huge political worry for India's ruling party, which faces elections this year and already has begun pulling a variety of economic levers, including cutting duties on imported food, in a desperate effort to hold down prices.

India today sets its poverty line at an income of about 33 cents a day, a third of the international extreme poverty standard of $1 a day. As food prices rise, it may be forced to recalibrate its calculation of the number of Indian families who need help, requiring the government to add billions of dollars a year to a food aid budget that already has surged 27 percent since the 2006-07 financial year.

"India's capacity to cope is immense," said Gianpietro Bordignon, the World Food Program's India director. "They have the biggest food safety net in the world. The question is how long that will be affordable as the costs increase more and more."

The World Food Program already faces deep cuts in its efforts because of a $500 million budget shortfall caused largely by rising food prices.

India hopes to address its own looming problem by increasing its agricultural productivity, now just half that of China, which has much more irrigated farmland, said Ramesh Chand, an agricultural economist at the National Center for Agricultural Economics and Policy Research.

But in a country where 60 percent to 70 percent of people make their living farming small plots and there are few jobs for unskilled labor in the cities, moving small farmers off their land to expand larger-scale agriculture would be difficult.

A better option for cutting hunger, Indian agricultural economists say, would be new government-funded work programs to build irrigation canals and improve a disastrous infrastructure, particularly rural roads that are now so overburdened and potholed that more than 30 percent of the country's agricultural produce spoils on the way to market.

Increasing agricultural output fast enough will be tough, particularly with the government announcing last week that it intends to put 30 million acres into biofuel crops by 2017.

In India, as in much of the world, nobody is quite sure whether world food production will increase to meet growing demand—as has happened repeatedly over the centuries—or whether a new era of permanently higher prices and hungrier times is on the horizon.

"It's a very difficult question," said Arif Husain, a food policy analyst with the World Food Program in Rome. "Nobody knows what the long run means right now. We are in uncharted waters."

Yep told u so a few weeks ago, it's a global trend but some didn't agree.

Well its a global trend but Poor economic planning,strategies that only benefited the rich and neglected the poor may come back to haunt us.Not that i expect miracles from the new govt. but its obvious that the blunders of the last govt. and its policy will hurt the new govt. And jahils and some Perhai likhay jahils will use that to defend the very ppl who created the mess!!!!
The economy they created was a consumer based economy,financed by loans and taken by ppl many of whom dont really have the means to pay em back.


heres an article if u dont take my word

http://news.bbc.co.uk/2/hi/south_asia/7346111.stm

Sughra Jamal, a 45-year-old Koran teacher in Pakistan's southern city of Karachi, is caught between the country's twin problems of inflation and unemployment.

Her husband, a carpenter, had a heart attack 10 years ago and cannot work.

One of her two sons is asthmatic and cannot hold a steady job. The other works as an assistant at a medical clinic for 1,500 rupees ($24) a month.

That leaves Ms Jamal as the sole breadwinner of the family, with a monthly income of roughly $89 that she receives in fees from her students.

How does she spread this income across various demands for food, medical care and education of her family?

"Health problems are out, I simply have no money to pay the doctors," she says.

She does pay roughly $3 in monthly school fees for her seven-year-old daughter, and another $20 to $25 a month in bus fares as she travels from door to door to give lessons.

Not alone

"The rest is taken up by food, although we hardly have two square meals every day of the week," she says.

Ms Jamal is not alone in her ordeal.

Tens of thousands of people around the country try to fight off food inflation through endless queues outside government-run low-price outlets called Utility Stores.


People are queuing up for food around the country

Most people standing in the queue outside one such store in Karachi intend to buy wheat flour at discounted prices.

Others are lining up to buy cooking oil, which is being given at discounted rates to only those customers who make purchases of a certain amount from the store.

They wait in the queue for hours, holding invoices of their purchases in their hands.

A World Food Programme (WFP) report last week said nearly half of the country's 160 million people are at risk of going short of food due to a surge in prices.

Food prices rose at least 35% in 2007, compared with an 18% rise in minimum wages, cutting the purchasing power of the poor by almost 50%, WFP said.

The question is, where are the benefits of an economy that has been growing at between 7% and 8% during the past five years?

After 9/11, Pakistan has received between $65bn to $70bn in terms of remittances, international debt rescheduling, aid inflows and foreign direct investment, says Asad Sayeed, an independent economist.

Slow down

This windfall fattened the bank deposits and coupled with low interest rates during 2002-06, sparked an unprecedented monetary expansion in the shape of consumer financing.

Easy credit lines created nearly 25 million buyers of houses, motorbikes, cars and larger vehicles, mostly in the urban centres.

But the policy hardly created any jobs. Instead, it created inflationary pressures in the economy, pushing more people below the poverty line.

Since the middle of 2007, the economy has started to slow down and defaults on consumer loans have gone up from less than 1% in 2002 to over 8% today.


Pakistan has received much foreign aid, says economist Asad Sayeed

The economic slowdown has also hit the automobile industry, which was the chief beneficiary of economic growth during 2002-07.

"Car sales went up from 35,000 units a year in 2000 to 180,000 in 2007, but they are now down to 120,000 and we expect further cuts," says Sibtain Allibhai, one of Karachi's major Honda car dealers.

Also, domestic food production is unlikely to satisfy demand over the next year.

This bodes ill for the poor.

It is also making the new government nervous, given the belief in some quarters that the previous government, headed by then Prime Minister Shaukat Aziz, was routed in the February elections due to the food crisis.

The new government faces the impossible task of bridging a yawning trade gap of $8.4bn in the short term.

Part of the task involves withdrawing subsidies on oil - a bitter pill the government will have to swallow in the face of rising international oil prices.

In the medium term, it needs to promote manufacturing with the focus on export diversification on the one hand and job creation on the other.

Economic sense

It also needs to expand agricultural services in order to increase domestic food production.

Both these steps will require quick decisions in the energy and water sectors.

A major reason for the current slowdown in manufacturing is said to be frequent power outages due to low electricity production.


Some grocery stores are giving incentives to entice shoppers

Coal-based power generation may be one option given the country's huge coal deposits in southern Sindh province.

Water conservation projects, focusing on the paving of watercourses to prevent 40% of irrigation water that is lost due to seepage, have also become imperative.

But none of these projects have a gestation period of less than three years.

"We will have to make more economic sense than the previous government, and do it quickly," says Kaisar Bengali, an independent economist who is currently working with a team of experts to help the new government overcome the immediate challenges.

He worries that emphasis on relief to the people may lead to economic imbalances in the medium term, but says the government has no choice.

"It has to get results in three years, whatever the cost. If it doesn't, it may not survive."

Al-Khalid stop spreading lies on this forum, do you not watch GEO or read any Pakistani papers
Let me enlighten you with the truth.

The reason why the government in Haiti collapsed is because Busharaff is taking part in the war on terror.

The reason why Thailand has stopped the export of rice is because Shorthcut Aziz published false economic data

The reason why there were food riots in Egypt was because Musharraf gagged the Media.

The reason why wheat price have jumped 50% around the world is because PML-Q tried to rig the election

The reason why rice price have jumped 30 % in 2 weeks is because Musharraf tried to sack the cheif justice.

The reason why petrol prices are more than $100 a barrel is because Musharraf won't allow the UN to investigate BB's assassination.

The reason why there is inflation in Pakistan is because Musharraf won't step down.


Al-Khalid once there is democracy in Pakistan the price of Atta will half,
Once Musharraf step down the price of oil will fall to $10 a barrel
Once the judges are free, the price of rice will half.

Using grains such as corn, which feed millions of people, as a bio fuel is nothing short of GENOCIDE by these freaking Western basta-rds!!! These dogs are more interested in running their cars than lives of millions and millions of people!! I just cannot believe this act of barbarism by greedy and moronic men!! And God allows this to happen?

AS you can clearly see,men make it happen!