Tackling the crisis of rising global food prices

14 Jun Tackling the crisis of rising global food prices

Tackling the crisis of rising global food prices – Today Current Affairs

INTRODUCTION- Global food prices are characterised by year-to-year volatility as well as steep and severe periodic price shocks that can lead to some sort of a crisis at the global and national levels.

The the form of  crisis –

• Food shortages 
• Trade disruptions
• Rise and spread in hunger and poverty levels 
• Depletion of foreign exchange reserves for net food importing countries
• strain on a nation’s fiscal resources due to an increase in spending on food safety nets,
• Threat to peace
• Threat to social unrest also in some places

Today Current Affairs

BACKGROUND –

Historical data on food prices compiled by international agencies such as the Food and Agriculture Organization of the United Nations, the World Bank/International Monetary Fund show that since the onset and the adoption of Green Revolution technology in the early 1960s,

 The world has been struck thrice by food price crises. 

All the three food price crises during 1973-1976, 2007-12, and the recent one which began towards the end of 2020 have one thing in common — they were triggered by factors outside agriculture. 

• They were not caused by any serious shortfall in agriculture production 
• The interval between two consecutive price shocks has narrowed down considerably
• The severity of shock is turning stronger

The recent spike – The Hindu Analysis

The recent spike in food prices due to- 

•  COVID-19
•  The Russia-Ukraine war
•  The diversion of food for biofuel needs.

The current food price spike first began in vegetable oils and then expanded to cereals. 

• The trade patterns of these commodities show that around 38% of the vegetable oil produced and consumed is globally traded.
•  In the case of wheat, dependence on trade to meet global demand forms 25%, while only one tenth of rice output or consumption is traded. 
• Trade dependence for maize is 16%. The Hindu Analysis
  
• The effect of global trade disruption will be higher for commodities that are traded more and vice-versa.
• The proportion of vegetable oil used for biodiesel increased from 1% in 2003 to 11% in 2011; it went up to more than 15% in 2021.

• When crude prices increase beyond a certain level it becomes economical to use oilseeds and grains for biodiesel and ethanol, respectively. 
• The second reason for the use of food crops for biofuel is the mandates to increase the share of renewable energy resources. The Hindu Analysis
  
• Food prices are also expected to go up in the current and next harvest season because of an increase in the prices of fertilizer and other agrochemicals. 
• The international price of fertilizer has increased by 150% between April 2021 and April 2022. 
• The international price of a bag of urea (50 kg) has increased from less than ₹1,000 to more than ₹3,000 in the last 15 months.

Implications for India : The Hindu Analysis

Export and import in the agriculture sector constituted 13% of gross value added in agriculture during 2020-21.

 When international prices go too low, India has checks on cheap imports to protect the interests of producers; and when international prices go too high, the country liberalises imports and imposes checks on exports to ensure adequate availability and reasonable food prices for domestic consumers.

•  The policy of having a buffer stock of food staples has also been very helpful in maintaining price stability especially in the wake of global food crises.
• The importance of agriculture exports to mop up food and agriculture surplus from the country is increasing.  The Hindu Analysis
  
• Ongoing trends in domestic demand and supply imply that India will be required to dispose of 15% of its domestic food output in the overseas market by 2030. 

Wheat export restrictions : The Hindu Analysis

The recent ban on wheat exports and restrictions on the export of other food commodities by India need to be seen in the light of an abnormal situation created by spikes in international prices. 

• The international market is looking for around 50 million tonnes of wheat to compensate for the disruption in wheat exports from Russia and Ukraine.
•  If India had not imposed a ban on wheat export, it would have resulted in a severe shortage of wheat within the country. 
• India should continue with a policy of strategic liberalisation, as followed in the past, to balance the interests of producers and consumers.

The policy of buffer stock has also been very helpful in maintaining price stability in the face of global price shocks.

WAY FORWARD – The Hindu Analysis

As the steam of Green Revolution technology slowed down with the start of the 21st century, food prices began increasing in real terms. At the same time, the resilience of the food sector against price shocks has also weakened.

• The world requires new breakthroughs such as Green Revolution technology, for large-scale adoption in order to enable checks on food prices rising at a faster rate. The Hindu Analysis
  
• Requirement of increased spending on agriculture research and development 
•  There is a need to strengthen and rejuvenate the global agri-research system under the Consultative Group on International Agricultural Research (CGIAR) which is heading towards disarray.
• Biofuel protocols have contributed to the global food crisis for the second time in the last 15 years. 
• Diversion of land under food crops and food output for biofuel should be carefully calibrated with implications for food availability.  The Hindu Analysis
  
• The last three food price crises were primarily caused due to an increase in energy prices and disruptions in the movement of food across borders.
•  Factors related to climate change are going to be an additional source of supply shocks in the years ahead. 

The situation requires coordinated and timely action by the global community.

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Plutus IAS Daily Current Affairs Eng med 14th June 

Rajeev Yadav

Plutus IAS Current Affairs Team Member