Global food crisis: causes and implications for India

Is there a global crisis unravelling? World food reserves are at their lowest in 25 years and the prices of most food crops are at a record high. This is causing inflation in several countries from Egypt to China--even riots in Mexico and western Africa. Governments are in a tizzy; they are either lifting bans on import of cereals or imposing restrictions on exports. Bangladesh suspended the 5 per cent duty on wheat import. Kazakhstan announced export tariffs. India imposed a partial ban on rice export and dramatically lowered the import duties on key food items.

If the current situation is grim, the future scenario is not rosy either. Global cereal prices are expected to remain high in 2008 mainly because of drought-like conditions in major cereal exporting countries and low world stocks, warns the latest Food Outlook report of the Food and Agriculture Organization (fao). It is even feared that this price rise is not a passing phenomenon. Climate change and the shift to growing food crops for biofuels would make world hunger more torturous. fao predicts that because of record freight rates and high export prices, many countries will have to pay more for importing cereals from world markets than they did in previous years, even though they are expected to import less.

The world food supply is vulnerable. savvy soumya misra takes a look at the crisis, its causes and implications for India.

Published: Tuesday 15 April 2008

Global food crisis: causes and implications for India

  Down to EarthAfrica
March 2008 Kenya faces acute food shortage. Global cereal crisis is likely to hit the country the hardest because farmers growing maize, the staple crop of Kenya, have been displaced following post-poll violence.

Riots over rising food prices in Namibia and Zimbabwe and several west African countries, including Cameroon, Morocco, Senegal and Burkina Faso, totally dependent on import of foodgrain.

Mozambique facing shortage of 1.25 million tonnes of foodgrain.

Food crisis imminent in Zimbabwe following crop failure.
  Down to Earth China

March 2008 China allocates temporary food subsidy to college students to offset inflation. The food cost in the country has soared 23 per cent after blizzards in 10 provinces of southern China destroyed crops and blocked transport links. Pork prices have gone up by 63 per cent in a year, vegetable prices have increased by 46 per cent and edible oil prices by 41 per cent.

September 2007 Italy observes a day-long pasta strike after the price of pasta went up by almost 20 per cent. The price of durum flour rose from 0.26 a kg to 0.45 a kg in just two months. Italy had to import cheap durum wheat from Canada and Syria. The condition became worse when Canada refused to export and Syria imposed a ban on export of grain.
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  Down to EarthEgypt

February 2008 Two people are killed in altercations while queuing up for subsidized bread in Cairo. Skyrocketing prices of wheat have forced the Egyptian government to increase the subsidy by about 52 per cent in the last one year, inflating its subsidy bill to US $2.67 billion. Egypt, the largest importer of wheat, shelled out an extra US $850 million for subsidized bread this year. Almost 40 per cent of Egypt is below poverty line and now the government has included another 15 million people in the subsidy list.

June 2007 Sequential import of wheat began in India. It procured 511,000 tonnes of wheat at US $325.6 a tonne in June. The purchase rate was US $120.28 above what was paid for 5.8 million tonnes in 2006. Low support prices, private players and a drought in wheat exporting countries like Canada, US and Australia triggered panic in the Indian wheat market. India may import 3 million tonnes of wheat in the current fiscal to shore up its dwindling stocks.
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