Colossal Calamity
Astone is dropped in America and the ripples are felt worldwide. First the crash of the hedge funds and subprime mortgages which led to the weak dollar and stock plunge nationwide. It seems trouble comes in threes. No sooner than the public was inundated with stories of institutional brokerage houses declaring staggering losses, than the oil prices rose in correlation to the growing fears of recession. Now the latest casualty to join in the cauldron of disaster is food prices.
The cost of groceries has periodically risen since the past year and given the current economical crises, economists are reticent to give a time frame on when the prices will stabilize. U.S Department of Agriculture released a 30 page report listing quite a few theories on the surge in prices. They reason, many factors are responsible for the current crisis, right from increased demands in growing countries such as India and China, to government backed ethanol program, which has increased the demand for corn based biofuel. This in turn, has adversely affected food manufacturers, increased the costs of production of canned goods which require high fructose corn syrup or starch. Not least, is the computerized hedge fund rading in agricultural commodities. Add to this recipe, the climatic changes in the rice and cereal producing countries, has substantially reduced the crop harvest. The demand is increasing yet the supply is dwindling.
According to one estimate this looming disaster will impoverish approximately one hundred million people worldwide, severely obliterating a decade of economic growth. For hike in one sector will trickle down to other commodities, affecting the cost of living. “Higher food prices risk wiping out progress towards reducing poverty and, if allowed to escalate, could hurt global growth and security” said the United Nations Secretary-General Ban Ki-moon.
The natural argument would be to increase the productivity to meet the immediate needs, and yes the major farmers in America and Europe and other farmers are rising to the growing demands and will increase by an estimated 4% in America alone, but for the small farmer in developing countries, it is an unattainable luxury. The rising costs, means no money to buy seeds, fertilizers and other required necessities to sustain a farm. To a farmer who exists on one meal a day making less than a $1.00 a day, this is the death toll of his livelihood.
Juan Jose Daboub, managing director of the World Bank, the international lending agency, in his recent statement on May 20th, addressed the global food price crisis, stating the price for staples such as rice does not bode well for the next couple of years and expects the prices to rise even higher as the demand expands further. According to Daboub, there are no quick fixes to this problem, such as the idea put forth by Thailand to create an OPEC style rice cartel with Laos, Myanmar, Cambodia and Vietnam to excise more control over international rice prices. But the proposal has not received much support apart from Cambodia. According to Chookiat Ophaswongse, president of the Thai Rice Exporters Association, this OPEC will not have the desired effect, since major rice producing countries such as India and Pakistan are not part of this OPEC. Some Asian countries including India and Vietnam have regulated their rice export to ensure they have adequate supplies for their needs.
The recent thirty-fourth session of the Food and Agriculture Organization of the United Nations Conference, held during November 2007, had a series of meetings to discuss climate change and bioenergy. It plans to conduct High-Level Conference between June 3rd to June 5th 2008, where the findings of the expert meetings and stakeholder consultations as well as new analysis and research conducted by the Organization will be discussed in detail. This conference is prodigious in its timing, for the beleaguered Organization which has come under attack for not stemming this downward spiral. Many Heads of State and Governments have confirmed their attendance, as well as the UN Secretary General, Ban Ki-moon, raising the bar of the June High-Level Conference to a Summit on world food security.
But is it, too little too late? For this colossal calamity will decide who will live and who will die.
- Editor
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