ENSURING GLOBAL STABILITY OF FOOD PRICES
By Ahaziah Abubakar Suleiman

October 16 every year is observed as World Food Day. The day was set aside by the Food and Agriculture Organisation (FAO), an arm of the United Nations to draw global attention to the state of malnutrition, hunger and poverty around the world.

On October 31, 2011, the world’s population is expected to hit seven billion and there is no commensurate increase in food supply to meet the ever increasing population. This is more evident in the developing countries of Africa, Asia and Latin America. Increases in the prices of food have in the recent past led to riots and serious crises in some countries leading to calls to regard food security as national security.

Recent figures released by the FAO showed that between 2005 and 2008, the world witnessed the highest levels of food prices in thirty years, with the cost of staple food items such as maize and rice, increasing by as high as seventy five and one hundred and sixty-six per cent respectively. This, according to reports, led to riots in more than twenty countries. The situation is not any different today, as the volatility of prices remains evident in many countries.

The FAO’s theme for this year’s World Food Day; “Food prices-from crisis to stability” focuses attention on the dangers posed by lack of stable food prices for more than one billion people who go to bed daily without eating and what could be done to mitigate hunger for the most vulnerable.

According to the World Bank, in 2010-2011, rising food costs pushed nearly 70 million people into extreme poverty. Price swings, upswings in particular, represent a major threat to food security in developing countries. Hardest hit are the poor. People living on less than one point two-five US dollars a day may need to skip a meal when food prices rise.

Contributing to the tight markets is rapid economic growth in emerging economies, which means more people are eating more meat and dairy products with the need for feed grains increasing rapidly as a result. Population growth, with almost 80 million new mouths to feed every year, is another important element.

The Population pressure is often compounded by the erratic and extreme meteorological phenomena produced by global warming and climate change. A further contributing factor is the distortive agricultural and protectionist trade policies of some developed economies.

Recognizing the major threat that food price swings poses to the world’s poorest countries and people, the international community, led by the G20, moved in 2011 to find ways of managing volatility on international food commodity markets.

In Nigeria for instance, the government at all levels had to intervene through some progressive agricultural policies. Such policies include; the National Food Security Programme, the National Economic Empowerment Development Strategy and Medium Term-Sector Strategy, to address the immediate negative impacts of the high costs of food items on consumers.

Recently, the Nigerian Minister of Agriculture, Dr. Akinwumi Adesina, made a startling revelation on food importation in the country. According to him, 98 trillion naira was spent on food importation between 2007 and 2010, of which 356 billion naira (about 2.4 billion dollars) was spent on rice importation alone. This means that everyday, Nigerians spend one billion naira (over 6 million dollars) on imported edible rice.

The government has decided to address this squarely. Policy documents have been finalised that would make Nigeria self-sustaining in locally produced foods. This includes the Agricultural Transformation Action Plan under the “Transformation Agenda” of President Goodluck Jonathan, which intends to move the country from food crisis to food stability.

Without a doubt, a lot more and better information is required to reduce food crisis in the world. In addition, there is need for greater transparency in trade on future markets so that governments and traders can make informed decisions and avoid panic or irrational reactions.

Furthermore, national or regional safety nets, including emergency food reserves, will necessarily have to be established to ensure food supplies to needy and vulnerable population groups during crises, as a first step to mitigating the effects of volatility. Poor consumers can also be assisted with cash or food vouchers and producers helped with inputs such as fertilizers and seeds.

Market-based mechanisms can also be applied to assist low-income developing countries to meet higher food import bills. In this vein, financial arrangements such as call options and concessional financing facilities such as those provided by the IMF, need to be given more consistently to low-income economies, to help them meet escalating food import bills and contend with the balance of payments problems, such as was experienced in 2007-2008.

The 2011 World Food Day is therefore an opportunity to stress once again that stability in the food market depends on increased investment in agriculture, particularly in developing countries, where 98 percent of the hungry live and where food production needs to double by the year 2050.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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