Wed 19 Mar 2008
UNDP looks towards Arab bretherns to help Bangladesh fight food inflation
Posted by Asif under Economy , inflationUNDP hits the panic button on Bangladesh.
Skyrocketing oil prices have driven up the cost of food worldwide, but their impact has been particularly dire in Bangladesh, where almost half of the 145 million people live on less than one dollar a day, Dervis said in a statement Wednesday.
“The real issue is protecting the vulnerable from these shocks,” Dervis said as he ended a three-day visit to Bangladesh.
He said petroleum-producing countries that are benefiting from the high price of oil can use the gains to help people unable to afford adequate food.
“Support from oil-rich countries, as well as other donors, could have positive benefits for Bangladesh,” Dervis said.
He said annual food inflation in Bangladesh reached 16 percent in December. Many poor households spend nearly 70 percent of their income on food, according to government statistics.
For more succinct look on what’s going on with the price hike, check this excellent piece by Mustofi here.
Whoever is to govern Bangladesh for the next 2/3 years has their work cut out for them. Have we passed through such a crisis in Bangladesh before? Is there a silent famine in Bangladesh today when the majority of the country is spending 80 percent of their income in buying food? From tomorrow we will start a new series on this. One of our own visited some of the remotest areas to check on this and she filed a report that we will start publishing. The results are fascinating. Don’t forget to check the Mustofi piece.
March 20th, 2008 at 12:04 pm
People are suffering, but I’m not sure that it’s as bad as a silent famine just yet. I hear people talking about malnutrition and starving children, but the fact of the matter is that I haven’t seen these things on the ground while touring Bangladesh over the last few months (Chittagong, Sylhet and Rajshahi).
I suspect that the current crisis will get better in the next few weeks when the Boro crop (which should be quite good… there haven’t been any massive droughts or floods this winter), aided by a largish rice purchase from India. If it doesn’t, there’s a distribution problem afoot, and the government will need to get off its ass and shake up a couple of people in Old Dhaka: in times like this, hording cannot be tolerated.
The other thing that needs to be done is to ease (not remove!) the government’s self imposed ban on financial speculation. Obviously speculation in excess is bad, but banning it altogether removes a battery of useful options (especially futures contracts) that make negotiating foreign food purchases easier. Witness the problems the government has encountered in negotiating a rice purchase from India: we want to buy at market rates, but since the prices keep changing beneath us our negotiators are aiming for a moving target, prolonging the purchase process and the suffering of the people on the ground in greatest need.
March 20th, 2008 at 12:07 pm
That was horrendous. Apologies for the enormous run-on sentence in my last post.
March 28th, 2008 at 12:49 am
From today’s Financial Times
Jump in rice price fuels fears of unrest
By Javier Blas in London and Daniel Ten Kate in Bangkok
Published: March 27 2008 18:30 | Last updated: March 27 2008 18:30
Rice prices jumped 30 per cent to an all-time high on Thursday, raising fears of fresh outbreaks of social unrest across Asia where the grain is a staple food for more than 2.5bn people.
The increase came after Egypt, a leading exporter, imposed a formal ban on selling rice abroad to keep local prices down, and the Philippines announced plans for a major purchase of the grain in the international market to boost supplies. Global rice stocks are at their lowest since 1976.
While prices of wheat, corn and other agricultural commodities have surged since late 2006, the increase in rice prices only started in January.
The Egyptian export ban formalises a previously poorly enforced curb and follows similar restrictions imposed by Vietnam and India, the world’s second- and third-largest exporters. Cambodia, a small seller, also on Thursday announced an export ban.
These foreign sales restrictions have removed about a third of the rice traded in the international market.
“I have no idea how importing countries will get rice,” said Chookiat Ophaswongse, president of the Thai Rice Exporters Association. He forecast that prices would rise further.
The Philippines, the world’s largest buyer of the grain, said on Thursday it wanted to purchase 500,000 tonnes after it failed to buy a similar amount earlier this month. It is struggling to import 1.8m-2.1m tonnes to cover a production shortfall and on Thursday confirmed it would tap emergency stocks maintained by Vietnam and Thailand.
Rice is also a staple in Africa, particularly for small countries such as Cameroon, Burkina Faso and Senegal that have already suffered social unrest because of high food prices.
Thai rice, a global benchmark, was quoted on Thursday at $760 a tonne, up about 30 per cent from the previous daily quote of about $580 a tonne, according to Reuters data. Some traders, however, said the daily jump was not as steep, adding that Thai rice had already traded at about $700 a tonne this week.
Rice prices have doubled since January, when the grain traded at about $380 a tonne, boosted by strong Asian, Middle Eastern and African demand.
Additional reporting by Roel Landingin in Manila
Copyright The Financial Times Limited 2008