Food prices – Can the poor afford them?

Food prices – Can the poor afford them?

By Sarath Fernando, Movement for Land and Agriculture Reform (MONLAR), Sri Lanka

In 2007, world food prices increased by an average of 40%. The consequences of those increases in terms of hunger and malnutrition in many countries has become a major focus for debate.

In rich Western countries the average share of family expenditure on food is about 8% of expendable income, while for poor families in poor countries it is around 50%, 60% or 70% of their income. In Sri Lanka it is said that this figure is around 80%. Thus, a 50% increase in the prices of essential food for the poor would make it impossible for them to have their food.

Discussion about food prices globally gives attention to worldwide trends which have led to the situation, trends that are unlikely to go away quickly. They include

The present global system of market expansion is also threatening the very survival of people and of the earth itself. The process of intensified extraction from nature and from human beings (the poor) in the interests of growth and accumulation of capital is excluding more and more people from survival, while destroying the ability of nature to survive and regenerate itself.
Food prices relate to ways in which fast economic growth is approached, and are likely to continue to grow. Is fast economic growth a global necessity? Do we need that growth? Who needs it? Who benefits from it? At what costs and to whom? Who pays the price? These are all questions which need to be addressed, urgently.

The case for Sri Lanka

a) Rates of food price increases in Sri Lanka – above global averages

The price increases of essential food in Sri Lanka last year were above global averages. Similar price increases also took place during previous years.

Rice reached Rs 80 to 95 /Kg in the second week of April 2008 and it is predicted that a Kg of rice will go beyond Rs. 100 /Kg within the next month or so. A person in Sri Lanka eats a little more than 100 Kg / year and a family requires about 40 Kg per month. This alone will come to Rs. 4,000 a month, when 2.1 million poor families receive less than Rs 1,500 /month (according to official figures).

Even if this amount is doubled to Rs 3,000 /month, their monthly income is insufficient to meet the rice requirements alone. Bread and wheat flour increased in price over the last few months to Rs. 40 /lb and Rs. 75 /kg respectively and consumption of wheat flour and bread has reduced drastically by 60 % on an average and 90 % in rural areas. The government is very happy about this achievement of reduced consumption of wheat flour and bread. But this is not a reason to be happy when we realize that rice consumption would also be reduced drastically due to the same reason of high and unaffordable price.

It simply means that the poor people will not eat the minimum requirement of basic food. In some items, such as dried chillies, fish, beef, dried fish and sugar, where the percentage increase last year was relatively low, the prices were quite high even at the beginning of last year. Therefore, trends in price increases over several years have to be looked at.

Although food is the most essential requirement, the reality is that for most poor families there are other items of expenditure that cannot be foregone. These include health (taking treatment when sick and medicines), education of children, transport (bus fares), house rentals, electricity in urban areas, fuel (gas for cooking), clothing, and requirements of personal care such as soap, washing soap, toothpaste. This creates a situation where such people are compelled to reduce their food including the essential nutritional requirements of children and mothers. The food price increases come in a situation where these other essential are also very high, as reflected in the cost of living index.

b) Cost of living index

The cost of living index (CCPI – Colombo Consumer Price Index) has increased rapidly and steadily, and the rate of increase is growing too. The weighting pattern used in the index is based on the average expenditure of a sample of 455 working class households

Month -year CCPI
January 2005 3986.7
Jan. 2006 4304.0
Jan. 2007 5184.3
Jan 2008 6302.5
March 2008 6441.7

c) Income levels of the poor – below global averages
People receiving incomes of less than 1 US $ / day or sometimes less than 2 US $ /day are considered poor globally. In Sri Lanka, while there is lack of clarity about the proportion of people below the poverty line, the official poverty alleviation programme (Samurdhi Movement) says that 2.1 million people receive less than Rs. 1500 /month which is US $ 0.5 /day income.

d) Nutritional status of the poor
Below are some extracts from IRIN (Integrated Regional Information Networks, UN) reports.

Only half the country’s 20 million people are receiving the minimum daily calorie intake of 2,030, according to the latest poverty assessments compiled by the government.
“An average poor person in Sri Lanka receives only 1,696 kcal per day while a non-poor person receives 2,194 kcal,” according to the Department of Census and Statistics, in a report entitled Poverty Indicators - Household Income and Expenditure Survey - 2006/07, released in March 2008.

e) Rural to urban migration
While we see the growth of urban population globally as a result of some affluent people wanting to consume more goods, services and facilities provided by modernization, it is also necessary to look at the massive growth in the migration from rural areas to urban slums and shanties. Here people have to feed themselves from city garbage as the last step in the process of being completely excluded from the market and then from society. After that, they are compelled to take the next step of “disappearing from the face of the earth.”

h) Social problems
While social unrest, security problems, food riots, crime and robbery disturb the rest of society, some other calamities and tragedies such as suicide, malnutrition and hunger do not disturb the rest of society (the non-poor ) to the same degree. Therefore, security arrangements”, sometimes called the “war against terrorism”, obtains higher priority, more urgency and higher allocation of resources than the need to reduce poverty, hunger and malnutrition.

Today, Sri Lanka is a very illustrative example of all the above phenomena. It began its path to faster economic growth, especially from 1977, moving away from an approach of protecting the poor towards counting more on the ability of the poor to meet their own food needs and other essential needs.

Since then we have had large and growing income disparities, more rural poverty, high and increasing malnutrition among children and mothers, very large cost of living increases, growing prices of food and costs of other services such as health and education, increased rates of suicide, crime, social unrest and rebellion such as the youth uprising in the late 1980s (which resulted in 60,000 disappearances), 30 years of war resulting in even larger numbers being displaced and getting killed and extremely large security expenditure.

There was huge expenditure on infrastructure, and incentives were provided to potential rich investors at the cost of the threat to the very survival of the rural and urban poor. These have largely been a result of attempted “faster growth”.
Today, about half of Sri Lanka’s population receive incomes that are much lower than the standard poverty line (US$ 1 or 2 /day ) and have been pushed to a level of poverty which makes it totally impossible to meet their essential requirements of food.

Way forward – Alternate approaches
In meeting the increased demand for food arising out of the various factors given earlier on, it is necessary to have a clear understanding of whose needs and what needs should obtain priority.

a) Collectives and Cooperatives
The growing recognition that small farmers have a greater potential in meeting the need for higher food productivity than the large-scale, industrial farming that is accompanied by large subsidies, appears to be a step forward in the right direction.

However, World Bank (WB) proposals to assist farmers through greater investment, allocation of resources and attention from global corporations to link with rural small-scale producers have to be looked upon with caution. Are these measures aimed towards reducing poverty and hunger, or towards making use of the small-scale rural farmers to meet the requirements of the rich consumers?

Markets always take the food out of the mouth of the poor to meet the higher appetite of the rich. If the processes depend on capital investment and planning by those who control capital, it will ultimately end up using the poor and their capacities to meet the requirements of the rich. Multinationals would want small farmers to grow crops that are useful to them as raw material to make higher profits. The WB would still want these farmers to shift away from low value crops, which the poor can eat, to growing high value crops to be consumed by the richer people. The input traders such as the chemical companies and bio tech giants would want them to use technologies that will make their earnings bigger.

Even the promoters of ‘micro-finance’ would want the poor to save a little more so that they buy more things from the market, thus catering to the needs of market expansion by capital.

The battle for control over the world food system between the small farmers and poorer consumers on one side, and the big traders (transnational corporations (TNCs), multinational corporations (MNCs) and supermarkets) and those national and global level controllers of the world food system on the other side, should end up in the struggle about who should have the power of planning and decision making.

What is suggested presently is that those who are now pushed out and excluded from the market should get more organized into cooperatives or collectives and that governments in such countries should restart or initiate mechanisms of protection and support, such as Marketing Boards so that those excluded could become more competitive and bargain to be included to a greater degree. Basically what is suggested by the emerging new thinking is that more space should be created to allow those who are completely excluded to enter into a global food and market system that is fundamentally disadvantageous to the poor.

b) Ecological or Regenerative
Agriculture
The people who are excluded from the market are beginning to recognize that they need to create “another world” that would include them and allow their survival. This realization can be a great moment of history if and when they realize that they have greater advantage not in trying to bargain (even collectively) to enter the system that is fundamentally designed against their interests, but in reversing the process.

This means that they should initiate a process of survival not by exploiting nature’s resources destructively, but by adopting methods that would restore nature’s capacity for regeneration. They do not have access to capital, which in some ways could be a blessing. Therefore they have comparative advantage in using methods that depend least on capital. This is done by allowing nature to make its maximum contribution. In agriculture this approach is called “ecological agriculture”. It can also be called “regenerative agriculture”. This is a way of relating to nature in a manner that would restore its ability to regenerate. This is similar to what happens in a natural, undisturbed, tropical forest.

The ideal model for this approach is a small plot of land where maximum diversity of useful crops for food, nutrition, medicine, fertilizer, fodder, fiber and fuel wood can be grown. Another principle would be to maximize the use of sunlight, a free gift of nature, by growing trees and plants to different canopies with a mixture of short-term and long-term crops. Avoiding the use of harmful and expensive chemical fertilizers and agrochemicals is a requirement for allowing the natural process of restoration of soil fertility, improving the humus content and soil water retention capacity. Use of animal waste such as cow dung is another very important requirement in soil improvement. Prevention of soil erosion which requires building ridges, mulching particularly on sloping land is very important.

It is very easy to show that overall productivity of such agriculture is much higher compared to large-scale monoculture. Efficiency and sustainability is far higher than large-scale mechanized agriculture. A small landholder having to survive on his or her small plot of land is a distortion created by the individualistic, capitalist system and is against nature’s way of providing means of survival for all forms of life (human, animal and plant). Therefore, the poor who are excluded from that mode of survival, that form of livelihood could put their creative abilities, potentials and strengths together to ensure survival of all. These collective efforts could be in restoration of ecological regeneration, protection and sharing of natural seeds, sharing of knowledge, skills and experiences, and sharing of food, labour and in meeting other needs.

All these require a process of taking control over the national and global food systems, which requires collaboration in the required political struggles at local, national, regional and global levels. This movement has already begun with concepts such as “food sovereignty” developed by global movements of small/ peasant farmers such as Via Campasena. Studies done in Asia, Africa and Latin America have shown that such agro-ecology approaches are growing very rapidly.

The crisis faced by the type of large-scale industrial agriculture and the associated crises such as non-sustainability of industrial farming, pollution and soil losses and contamination of food and environment with harmful inputs and drop in productivity and efficiency that requires more and more subsidies and the failure of market adjustments such as the failure of WTO. Fear of unhealthy food and the growing opposition to the efforts of TNCs and MNCs to take control over the world food systems and finally the dangers of global warming and climate change is creating the possibilities for the small-scale ecological farming and such farmers setting a new and more logical model for the whole world. The rich will have to adjust to this more rational model since the poor, the billions of small farmers, cannot adjust to the irrational model. Much more attention and concrete studies are needed to look into the already growing alternative models and to bring such experiences together towards making them the mainstream way forward.

Way forward – Some Sri Lankan experiences