Friday, January 14, 2011

Not only Onions, serious food crises is on its way

The soaring Onion prices have severely effected on monthly budget of Indian consumers. Onions and Potatoes are mainstays in Indian diet, the cost of Onions increased by more than 60% in the past year. Not only onions, the prices of Milk, eggs, fruits, vegetables are also gone up, Indian food staples prices have raised by 18% in December 2010.This is the highest level in recent years, it reflects that the Indian poor class people are spending 50% of their household income on food only. The UN Food and Agricultural Organization stated that global prices have exceeded the levels of during the 2007-08 crises. Sugar, Corn, Soya bean and edible oils prices have risen by 50% since 2009. This adversity is caused by crop failures, broken distribution system and so many reasons.

The demand for the food has been increasing by world’s growing population. Primarily the extreme weather conditions and climate changes have caused to crops failures. Some other factors also pushing the food prices high i.e. growing demand from developing countries, increasing the usage of food crops (sugarcane, Corn) for ethanol fuel, raise in fuel prices and some times the US dollar value fluctuations also impact on food grain prices since the most of the commodities are denominated in dollar currency only. The agriculture commodities future trading also drives the food prices up, the non traditional investors are pumping their money to making profits which leads to further food inflation. Increased fuel prices lead to higher cost in food transportation and high input cost in agriculture like fertilizers, pesticides. Agriculture lands are being lost due to severe degradation, urbanization and industrialization that effects less crop production and price hikes.

If we focus on world food grains, Russian wheat crop was devastated by drought and wild fire, Pakistan crops were failed due to heavy floods and India lost its paddy and other food crops by excessive rains. The price of wheat has reached highest in United Kingdom and Europe, drought in Argentina and Brazil caused less yields in corn and soya bean. Presently in Australia, the disastrous floods are affecting badly on wheat, Sugar and vegetable harvests. Food riots were witnessed in Mozambique, Pakistan, Bangladesh, Haiti and Egypt due to price hikes of basic food commodities. When the world is facing such a stressful food crisis and I wonder about our Indian food grains distribution system, more than 320 millions of Indians are going bed hungry everyday and ironically the food grains are rotting away in storages. Some parts of the world are wasting the food and some parts are starving, some people in developed countries are clinically obese and the people in under development countries are malnourished.

The global food turmoil may put pressure on Indian food market. Indian government has taken immediate steps to manage the onion crisis, such as banning the export, importing onions from abroad and the government announced Rs.10.00 subsidy to traders on each kg of onions. Temporarily, this might be good but the government has to take stable measures to control the food inflation. Most of the Indian food chain system is under control of small traders and middlemen, the government should take necessary steps to avoid the traders’ speculation for effective distribution with fair price. Food security is the fundamental welfare of the state, government has to provide the basic food at reasonable price. The proposed food security bill is still pending, I hope it will get approved soon and the poor will get the food grains cheap and easily.