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Sunday, August 22, 2010

Country's food security at risk



Shamsul Huq Zahid

Signs are rather ominous on the horizon as far as global food prices are concerned. The food prices are still well below the unprecedented level reached in the year 2007-08, when higher prices led to severe food crisis in many countries across the globe. But, if not the rice, the current wheat price rise is being considered the fastest in 40 years.

The 2007-08 food crisis that had happened in almost three decades, pushed the prices of food prices to record highs and triggered food-riots in a number of countries.

Experts are of the opinion that the current wheat price rise could lead to hikes in the prices of other crops, including rice, despite the fact the global food reserves this time is much healthier than that of 2007-08. The ongoing global recession is also acting against any possible hike in food prices because of lower consumption.

But experts have expressed the fear that panic buying and export ban of food grains by major producers could fuel prices, trigger speculation and lead the world to a crisis witnessed during 2007-08.

One of the two factors has already come into play in the global food market. Russia has imposed ban on the sale of wheat as fires have been destroying its wheat crops on millions of hectares. The production in Canada

Bangladesh, which has been rated as one of the 'high' risk countries in the Food Security Risk Index 2010, released by risk analysis and rating firm Maplecroft, is a victim of the sudden Russian decision to stop wheat export.

The Maplecroft in collaboration with the World Food Programme (WFP) has developed 12 criteria to evaluate the risks to the supply of basic food staples for 163 countries. The criteria used to calculate the ranking of the countries include the nutritional and health status of populations, cereal production and imports, GDP per capita, natural disasters, conflict and effectiveness of the government.

Bangladesh's move, according to a recent report published in the Financial Express, to import at least, 25 per of its total wheat requirement this year has suffered setback because of the Russian ban. The private importers, reportedly opened letters of credit to import 0.6 million tonnes and the government 0.2 million tonnes of wheat from Russia. Now the import of the food grain from other sources would be costlier.

The East European wheat exporting countries have also hiked the price of the food grain following the Russian ban. Bangladesh cannot afford import of wheat from US, Canada and Australia because of higher prices. However, the quality of wheat grown in these countries is high.

The prices of wheat, for obvious reasons, have gone up in the domestic market. This development has also left an impact on the prices of rice, the main staple. The rice prices instead of going down have recorded rise even after a good boro rice harvest this year. At the retail level, the prices of coarse varieties of rice is above Tk 30 a kg, which is considered high.

Now where does Bangladesh stand in the Food Security Index? The Maplecroft has placed it at 23rd position (lower ranking denotes higher risk) in its Food Security Risk Index. Bangladesh, along with India and the Philippines, two rice exporting countries, has been put in the 'high' risk category.

A total of 10 countries, including the war-torn Afghanistan and nine African countries are in the category of 'extreme' risks. Finland (163) is the country considered least at risk, whilst the other Scandinavian countries - Sweden (162), Denmark (161) and Norway (160) - follow closely behind. Other low risk countries include Canada, (159), USA (158), Germany (156), UK (146) and France (142).

Despite a number of odds, including natural disasters and continuous shrinking of cultivable land, Bangladesh

But it faces problems when the prices of food grains go abnormally up in the international market. The country had a bitter experience in 2007-08 when food prices spiked and food grains became scarce in the international market. Neighbouruing India had promised to export 0.5 million tonnes of rice to Bangladesh at that time. But it had failed to honour its commitment.

The incumbent finance minister of India during a recent visit to Bangladesh has again promised to supply 0.4 million tonnes of rice to Bangladesh. Everybody would expect that India would keep its promise this time. The government, in the meanwhile, is trying to import food grains, including rice, from Myanmar and other sources and build up a healthy buffer stock to face any eventuality. The last boro harvest has been good but not a bumper one. The outlook of the Aman crop this year remains cloudy because of inadequate rain. The rainfall during the current monsoon has been nearly 40 per cent below the normal level.

So, this year's Aman production could prove very crucial as far as the country's short-term food security is concerned and the policymakers would have to chalk out plans to ensure the maximum output by ensuring all necessary inputs, including irrigation. has dropped by almost a quarter because of floods in June last. has achieved the near self-sufficiency in food production. But it has to import a substantial quantity of food grains every year to build up reserve stocks that help the authorities to keep the prices of rice within the reach of the common man.

Source: The Financial Express - Bangladesh newspaper – Date: 23-08-2010

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