Prices of major food items have increased substantially over the last three years, and especially in the first half of 2008. According to the World Bank, approximately 100 million people might be thrown back into the ranks of the poor because of the price rise. There have been riots in a number of countries, and the World Bank has identified 33 as especially vulnerable. The poor are mainly vulnerable because they spend the largest portion of their income on food. For example, in Vietnam, about 75 per cent of income is spent on food, 70 per cent in Nigeria, and 50 per cent in Indonesia compared with 12 per cent in the United States of America (USA).According to the United Nations midyear (2008) update of the World Economic Situation and Prospects, the total number of food insecure people was nearly three billion, or about half the population of the world. In addition, around 18,000 children die every day as a direct or indirect consequence of inadequate nutrition, the UN report says.The factors affecting the global food situation are not far to seek. First, the land-use pattern had changed in the last few decades, with a greater proportion that was previously used for agriculture now being used for non-agricultural purposes. At the same time, a greater proportion of the land used for agricultural purposes was now devoted to non-food agriculture. While there has been a significant increase in grain production over the years, it had not necessarily translated into increased human grain consumption.Degradation of agricultural land is another important factor. Studying the data spread over 23 years (1981-2003), the Food and Agriculture Organisation (FAO) has concluded that 24 per cent of the global land area has degraded. This is over and above the extent of land that had already degraded. The situation has worsened since 1991 when the previous assessment was made. According to the FAO, in India, about 592,000 sq. kilometres of land have deteriorated – the 1991 assessment placed the figure at 450,000 sq. kilometres. Again, in 1980, 30 per cent of annual World Bank lending went to agricultural projects. This declined to 12 per cent in 2007. The overall proportion of all official development assistance going to agriculture is currently 4 per cent only.It is significant that the rising global population means not just more mouths to feed, but more sophisticated tastes to satisfy, as developing countries grow wealthier. And as demand for food increases around the world, supply capacity is struggling to keep up with these changing requirements – with potentially dire consequences for every nation.Already, in the developing world, strict restrictions on exports of foodstuff are obstructing a long-term solution, even as import barriers come tumbling down. Each country, is trying to keep domestic supplies high on the justifiable grounds of food security. As more countries implement export controls, global supply contracts even further, pushing prices up.The United States of America (USA) and international community should go on a war footing to engineer a new green revolution, particularly in and for Africa. Africa has not had technological productivity improvements in agriculture to the extent that Asia and Latin America have had. Investment in agricultural research provides the biggest bang for the outsider’s buck. According to the World Development Report 2008, investment in agricultural research has paid off handsomely delivering an average rate of return of 43 per cent in 700 projects evaluated in the developing countries.Today, an initiative is required in the public as well as private sectors. Private sector initiative alone will not be enough to generate research for African agriculture because of the limited purchasing power in Africa. If markets are small, returns are correspondingly small, reducing the incentives for private sector research. The international consortium of agricultural research under the aegis of the Consultative Group on International Agricultural Research (CGIAR) needs to be revitalised and provided with extra funding.The recent crisis has also made it clear that food prices are now inextricably linked to fuel prices. Higher fuel prices add to the cost of agricultural production. More importantly, they increase the attractiveness of diverting land and agricultural products towards producing fuel. With grain used for fuel rather than for human consumption, food is now fodder for fuel. Any long term strategy to increase food supplies needs to include action to reducing dependence on fossil fuels.Meanwhile, in an emergency appeal on July 24, 2008, Oxfam warns that millions of people in Ethiopia, Somalia, Uganda, Djibouti and Kenya are fast being pushed ‘towards severe hunger and destitution”. Poor families are struggling to buy staples, namely, maize and wheat, which have more than doubled in price over the past 12 months, Ethiopia is worst affected, with more than ten million people requiring assistance. About 4.6 million needs emergency food aid until the next harvest in November 2008. (The writer is former Principal, Mangaldoi College)
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Wednesday, September 3, 2008
Food crisis: a global concern
Prices of major food items have increased substantially over the last three years, and especially in the first half of 2008. According to the World Bank, approximately 100 million people might be thrown back into the ranks of the poor because of the price rise. There have been riots in a number of countries, and the World Bank has identified 33 as especially vulnerable. The poor are mainly vulnerable because they spend the largest portion of their income on food. For example, in Vietnam, about 75 per cent of income is spent on food, 70 per cent in Nigeria, and 50 per cent in Indonesia compared with 12 per cent in the United States of America (USA).According to the United Nations midyear (2008) update of the World Economic Situation and Prospects, the total number of food insecure people was nearly three billion, or about half the population of the world. In addition, around 18,000 children die every day as a direct or indirect consequence of inadequate nutrition, the UN report says.The factors affecting the global food situation are not far to seek. First, the land-use pattern had changed in the last few decades, with a greater proportion that was previously used for agriculture now being used for non-agricultural purposes. At the same time, a greater proportion of the land used for agricultural purposes was now devoted to non-food agriculture. While there has been a significant increase in grain production over the years, it had not necessarily translated into increased human grain consumption.Degradation of agricultural land is another important factor. Studying the data spread over 23 years (1981-2003), the Food and Agriculture Organisation (FAO) has concluded that 24 per cent of the global land area has degraded. This is over and above the extent of land that had already degraded. The situation has worsened since 1991 when the previous assessment was made. According to the FAO, in India, about 592,000 sq. kilometres of land have deteriorated – the 1991 assessment placed the figure at 450,000 sq. kilometres. Again, in 1980, 30 per cent of annual World Bank lending went to agricultural projects. This declined to 12 per cent in 2007. The overall proportion of all official development assistance going to agriculture is currently 4 per cent only.It is significant that the rising global population means not just more mouths to feed, but more sophisticated tastes to satisfy, as developing countries grow wealthier. And as demand for food increases around the world, supply capacity is struggling to keep up with these changing requirements – with potentially dire consequences for every nation.Already, in the developing world, strict restrictions on exports of foodstuff are obstructing a long-term solution, even as import barriers come tumbling down. Each country, is trying to keep domestic supplies high on the justifiable grounds of food security. As more countries implement export controls, global supply contracts even further, pushing prices up.The United States of America (USA) and international community should go on a war footing to engineer a new green revolution, particularly in and for Africa. Africa has not had technological productivity improvements in agriculture to the extent that Asia and Latin America have had. Investment in agricultural research provides the biggest bang for the outsider’s buck. According to the World Development Report 2008, investment in agricultural research has paid off handsomely delivering an average rate of return of 43 per cent in 700 projects evaluated in the developing countries.Today, an initiative is required in the public as well as private sectors. Private sector initiative alone will not be enough to generate research for African agriculture because of the limited purchasing power in Africa. If markets are small, returns are correspondingly small, reducing the incentives for private sector research. The international consortium of agricultural research under the aegis of the Consultative Group on International Agricultural Research (CGIAR) needs to be revitalised and provided with extra funding.The recent crisis has also made it clear that food prices are now inextricably linked to fuel prices. Higher fuel prices add to the cost of agricultural production. More importantly, they increase the attractiveness of diverting land and agricultural products towards producing fuel. With grain used for fuel rather than for human consumption, food is now fodder for fuel. Any long term strategy to increase food supplies needs to include action to reducing dependence on fossil fuels.Meanwhile, in an emergency appeal on July 24, 2008, Oxfam warns that millions of people in Ethiopia, Somalia, Uganda, Djibouti and Kenya are fast being pushed ‘towards severe hunger and destitution”. Poor families are struggling to buy staples, namely, maize and wheat, which have more than doubled in price over the past 12 months, Ethiopia is worst affected, with more than ten million people requiring assistance. About 4.6 million needs emergency food aid until the next harvest in November 2008. (The writer is former Principal, Mangaldoi College)
Sunday, July 6, 2008
Oil Crisis: A View from USA
HN DasThe metal signboards all around the residence of the President of the United States of America has a single message. It ends with the following sentence: “While the Capitol represents the freedom and the ideals of the nation, the White House stands for the power and the statesmanship of the Chief Executive.”Standing in front of the White House on a June 2008 morning, I looked at the Capitol, at a distance, where the US Congress consisting of the Senate and the House of Representatives sits. The Congress is the legislative wing of the Republic. The executive business is conducted in the White House and another big building in its compound. The huge Treasury building, across the road and perpendicular to the White House, conducts the financial business of the Republic.Standing at that vantage point, I realized that the statesmanship mentioned in the above quotation referred to the innate qualities of the leader chosen by free and fair election among the citizens of the USA. But the President’s power is derived from the wealth and support of the nation.The USA is the wealthiest nation in the world. According to the World Bank’s estimates for 2005, the gross national income (GNI) of the USA was $12,969.6 billion against China’s $2,263.8 billion and India’s $793.0 billion. The USA, however, has only a small population of 296 million compared to China’s 1,305 million and India’s 1,095 million. Therefore, the per capita income of the USA was $43,740 against China’s $1,740 and India’s $720. The International Monetary Fund found that, in terms of purchasing power parity (PPP), the USA’s per capita wealth in 2007 was $143,727 against China’s $11,267 and India’s $6,613.This wealth has been accumulated during the past five centuries by the very hard, intelligent and dedicated work of generations of enlightened immigrants who came from a post-renaissance Europe. This has been enriched by a couple of generations of IT-savvy immigrants from Asia, especially from China and India, who came in the second half of the 20th century.This tremendous wealth, both physical and human, was the basis of the USA’s power. It used the wealth to help the Allies during the second world war, Europe in the reconstruction phase under the Marshal plan, and the poor countries either directly or through the World Bank. The USA derived international power after it joined the Allies in the Second World War, ending centuries of isolation.This great nation is now smitten by a gigantic crisis. As a result of the increase of crude oil price from $45 per barrel in 2004 to $143 in June 2008 in the international market, the gasoline price per gallon in the local market has quadrupled from less than $1 in 1999 to $4 in June 2008. This has let out an inflationary pressure which has engulfed the entire economy. Meanwhile, one of the worst recessions has thrown hundreds of thousands of workers out of job so that the unemployment rate has reached the record high of 5.5 per cent. The automobile industry is in doldrums. Thousands of vehicles remain unsold in the yards. Residential and commercial house holders are in a quandary because many are facing foreclosure of their mortgages. The trade deficit has increased sky high. The US Dollar has fallen in value in the international market. The oil producers are preferring to have their payments, and to hold their surplus, in other currencies, mainly in euro.Many experts predict that the American lifestyle, based on heavy consumption of gasoline and other oil products, is facing a deep crisis. Some predict an end of this lifestyle. One expert — Paul Swartz, Chairman of the Capital Region Energy Forum — even predicted an end of the Western civilization! (Times Union, Albany, New York, June 10, 2008). In this context it is necessary to go into the root causes of this crisis of crude oil price rise. Beside the demand supply mismatch, there are quite a few factors which exerted extraneous pressure on price in recent times. Iran, for example, is in a state of flux because of constant fear of war against Israel. Iran has 10 per cent of the world’s proven oil reserves. Its production was 6 million barrels of crude oil per day in 1974. This figure fell to 3.8 million barrels per day by 2006. This happened because ever “since the 1979 Iranian Revolution due to a combination of political unrest, war with Iraq, limited investment, US sanctions, and a high rate of natural decline”, the production has been falling. Recent outbursts of US President George Bush against Iran’s nuclear programme and additional sanctions by the USA and European countries aggravated the situation. Iran has curtailed production and increased the price of crude oil.Supply has been reduced due to a number of other factors. There has been a “peaking” of world oil production. “Peak oil” has been defined as “the point in time when the maximum rate of global petroleum production is reached, after which the rate of production enters terminal decline.” According to the International Energy Agency’s estimates, there has been a “pronounced loss of momentum in the growth of oil production during the last few years. After climbing from 82.90 million barrels per day (mb/d) in 2004 to 84.15 mb/d in 2005, output only increased to 84.80 mb/d in 2006 and then declined to 84.62 mb/d during the first ten months of 2007” (Earth Policy Institute, Lester R. Brown, “Beyond the Oil Peak”, November 15, 2007.)Demand, on the other hand, has been increasing tremendously. World population has increased so much that it is expected to become double between 1980 and 2030. People are becoming more oil dependent. In the rich countries demand for oil is increasing fast because people are consuming more, private transport is increasing, and there is some amount of hoarding too. In the USA, for example, 88 per cent of the workforce use private transport to go to work. Public transport has not developed at all. Beside hoarding by the oil companies, the US Government is maintaining a Strategic Petroleum Reserve of 727 million barrels at four sites in the gulf of Mexico in enormous salt caverns which have been converted to store crude oil.China has been consuming more and more oil to propel its unbelievable rate of economic development. The number of cars is increasing. Energy-intensive industries such as steel and aluminium are consuming more and more electricity generated from oil. All coal-based power plants in the Beijing area have been converted into oil based in order to reduce the level of pollution in that city ahead of the Olympics. China is feverishly buying crude oil in the international market for strategic purposes.One extraneous factor which is playing a sinister role is speculation. Hedge Fund operators and Wall Street bankers are pushing up crude oil price by their activities in the New York market. This probably prompted Morgan Stanley to predict that crude oil price will reach $150 by July 4,2008 — the US National Day.What is the solution? The US has the resilience to bring its economy back to track given the political will. It has more than sufficient oil reserves. Already there is a move to go in for offshore drilling which was earlier prohibited due to environmental reasons. The presumptive Republican Presidential candidate Senator John McCaine supported such drilling and claimed that the US has “untapped oil reserves of at least 21 billion barrels’’.(The Washington Post, June 17, 2008). President Bush seemed to agree. (The New York Times, June 18,2008). Beside that, the US has the largest known deposits of oil shale in the world, which is “enough to meet US demand for oil at current rates for 110 years” (Oil Reserves, Wikipedia). This means that the US can easily overcome the present oil crisis in a short time.The problem will be for countries like India where the entire development process may be stunted due to increase in price of crude oil and non-availability of sufficient oil resources. (The writer was Chief Secretary, Assam, during 1990-95)
Wednesday, June 18, 2008
Protest against price rise at Karimganj
Protest against price rise at Karimganj
From A Correspondent NILAMBAZAR, June 17 – Members of Karimganj district BJP unit burnt an effigy of former Education Minister Ripun Bora and Chief Minister Tarun Gogoi recently at Karimganj town and shouted slogans against the State Government.Besides, the BJP workers observed blackday and protested against price rise of essential commodities, including LPG and fuel. On the otherhand, the AUDF and AGP burnt an effigy of the Union Petrolium Minister at different places of the district amidst sloganeering against price rise of LPG and POL items