Don't blame the world alone

By Neville de Silva

When the government says that the soaring costs at home of our staple foods like rice and wheat are caused by rising world prices, it is right. But that is not the whole story. The trouble with politicians, unless they are honest ones who would plead mea culpa when they are wrong or proved to be so, is that they are incapable of admitting to mistakes. Sceptics might even say that the honest politician is a gross contradiction. Those who are honest are hardly likely to be politicians. If they somehow do become politicians they are unlikely to last long in that vocation.

Let us admit it. There is a world shortage of commodities such as rice, wheat, corn and maize. There are several reasons for this. But for the moment it must be conceded that global food scarcities are causing serious concerns because the political stability of some countries is in jeopardy. The strikes and riots that have occurred in some parts of the world characterize the social unrest that is beginning to worry governments in power, whatever their political makeup. Close to home some 20,000 workers rioted in the Bangladeshi capital Dhaka. In Indonesia there were demonstrations and disturbances. Hungry crowds in Haiti stormed the presidential residence in Port-au-Prince protesting over food prices. There have been riots in Niger, Cameroon, Burkina Faso and Senegal and protests in Egypt, Morocco, Mexico, Ivory Coast, Mauritania and Yemen where children marched to protest their hunger.

So the Sri Lanka government could legitimately say that the rise in food prices is not a local phenomenon. In fact in some countries the situation is far worse than that which faces the public in Sri Lanka. Only the other day finance ministers and central bankers from the world's most powerful nations met in Washington to discuss the global credit crunch which they believe could lead to an economic meltdown. But the Spring meeting in Washington could not ignore the larger, and surely the graver crisis facing millions of the world's poor. Both the president of the World Bank Robert B.Zoellick and the managing director of the International Monetary Fund (IMF) Dominique Strauss-Kahn had to acknowledge the seriousness of the dramatic rise in the global cost of food which has triggered food crises in 37 countries, according to the Food and Agriculture Organisation (FAO).

Strauss-Kahn said in Washington that "hundreds of thousands of people will be starving." "Children will be suffering from malnutrition with consequences for all their lives." He went on to say that increasing food prices would push up the costs of imports for poor countries. This would lead to trade imbalances that could affect the developed nations as well. That was one way of saying that the problem was essentially one that faced the poor for the moment but could grow into something that affected all. "It is not only a humanitarian question," Strauss-Kahn said.

In less than a year the price of rice has jumped by 74%, wheat by 130% and soya by 87%. The FAO said the other day that there are only 8-12 weeks of cereal stocks in the world while grain supplies have dropped to their lowest since the 1980s. No wonder then that the World Bank's Robert Zoellick said "This is not just about meals foregone today, or about increasing social unrest, it is about lost learning potential for children and adults in the future, stunted intellectual and physical growth."

Without urgent action to tackle the crisis and resolve it, the fight against poverty could be set back by seven years. This problem of high prices and scarce stocks are going to be with us for another six to seven years at least, authorities believe. Among the factors for this enormous rise in food prices are the increased demand for rice, wheat and meat, especially in countries such as China and India where a burgeoning middle class currently some 600 million people ( close upon the combined population of the US and Western Europe) are enjoying higher living standards. While poor weather has undoubtedly accounted for poor harvests in major producing countries such as Australia, the diversion of land for the growing of crops to produce bio-fuels is a major cause for the food scarcities now haunting many developing nations. The poorer countries argue that rich nations in their haste to tackle global warming are causing food prices to spiral by encouraging those in both developed and developing countries to grow crops for bio-fuel rather than to feed people.

The 2008 World Development Report states more than 240 kilograms of corn are required to produce 100 litres of ethanol, a bio fuel to replace some of the petrol now used. Those 240 kilograms are sufficient to feed one person for a whole year. While we could justifiably point our finger at the rich nations, can we absolve ourselves of part of the blame for the crisis confronting us today? The truth is that Asian and Pacific countries, not to mention those in other continents, have neglected agriculture over the years leaving some 200 million people in this region in extreme poverty. The Economic and Social Survey of Asia and the Pacific 2008 produced by ESCAP states that the neglect of agricultural development and rural development has been among the main cause for this.

In previous columns some months back I did blame successive governments in the last 25 years or so for only paying lip service to agriculture. Sri Lanka is a country that achieved self sufficiency or near self sufficiency in rice. It is true that some of the traditional rice-producing areas do not cultivate as much as they used to because of the conflict. That includes some of the dry zone areas which were major producers.

Even allowing for this, one must surely ask what happened to the priorities given to agriculture in general and not just rice, in the 1960s and early 70s. Where is the institutional framework that supported such progressive policies? What has happened to the Paddy Marketing Board that provided some competition to the private middleman and offered a guaranteed price for paddy? Where is the Marketing Department, despite its shortcomings, that purchased vegetables and other produce from the farmers in remote areas and thus encouraged efforts toward greater productivity? What happened to the extension workers who advised and helped the farmers by giving them valuable information and basic technical assistance? Where are the irrigation engineers and technical staff that kept the irrigation channels functioning and the water flowing to the farthest fields? What has happened to fertilizer and other subsidy schemes and the provision of the necessary seed on time for cultivation?

Even if all or some of them exist today, they have been relegated by political and official indifference and politicisation to levels of unimportance. While agriculture in Sri Lanka has suffered from political neglect, what has happened to those who should be monitoring commodity markets and doing the kind of research that would keep us abreast of international developments and future trends?

Surely the Central Bank should be one of the institutions that should be doing so, just as the Food Department in the old days kept track of market trends. Again the problem is politicisation. Today the Central Bank is not the kind of institution it used to be. It is now headed by an accountant not an economist and there is a vast difference between the two disciplines. Moreover, the Central Bank is also beginning to join the chorus of government officials and institutions that seem to believe that the louder its carps at critics the more cogent and legitimate its arguments.

The food crisis did not descend on the world suddenly and unexpectedly. It has been building up over the last four or five years. The US which subsidises its farmers had begun diverting land for crops to feed its growing bio fuel industry. Our giant neighbour and one some distance away with some one-third of the world's population, have registered impressive growth. This has resulted in an ever expanding and affluent middle class in both countries seeking better lifestyles. In Africa, Malawi which suffered a severe drought in 2005 leaving close to five million people in need of food aid, is still recovering from it. Its agriculture has only now turned the corner. There was evidence of the pressures that would be exerted on several staple crops that feed the world's growing population.

Yet, those in our country who should be watching the trends and making forecasts appear not to have noticed it or seemed unconcerned. It is they who should be warning governments of dangers ahead. They appear to have fallen down on their job. But, they alone are not remiss in this. The greater blame should fall on politicians who have failed to take cognizance of the importance of agriculture and so made the country vulnerable to external forces.

If we cannot feed ourselves and need to depend on others for our staple food we are at the mercy of others. Food security seems furthest from the minds of our politicians and mandarins.