by hilzoy
Paul Krugman in today’s NYT:
“These days you hear a lot about the world financial crisis. But there’s another world crisis under way — and it’s hurting a lot more people.
I’m talking about the food crisis. Over the past few years the prices of wheat, corn, rice and other basic foodstuffs have doubled or tripled, with much of the increase taking place just in the last few months. High food prices dismay even relatively well-off Americans — but they’re truly devastating in poor countries, where food often accounts for more than half a family’s spending.
There have already been food riots around the world. Food-supplying countries, from Ukraine to Argentina, have been limiting exports in an attempt to protect domestic consumers, leading to angry protests from farmers — and making things even worse in countries that need to import food.”
Krugman has a good rundown on the causes of the shortage. (I’d add the Iowa caucuses to the list of culprits — read his article to see why. Yet another reason to actually rotate the first primaries and caucuses away from Iowa and New Hampshire.) But just to provide an illustration that’s all over the papers here in Karachi, but not that widely covered in the US:
” Nearly half of Pakistan’s 160 million people are at risk of going short of food due to a surge in prices, the World Food Programme said on Friday.
The WFP survey covering the year to March showed the number of people deemed “food insecure” had risen 28 percent to 77 million from 60 million in the previous year.
The WFP estimates that anyone consuming less than 2,350 calories per day is below the food security line.
Sahib Haq, an official with the WFP’s Vulnerability Analysis & Mapping Unit in Pakistan, said food prices rose at least 35 percent in the past year compared with an 18 percent rise in minimum wages.
“There is a very big gap between the increase in prices and increase in wages … the purchasing power of the poor has gone down by almost 50 percent,” Haq said. (…)
The price of wheat flour in January was between 24-25 rupees (38 U.S. cents) per kg in three of Pakistan’s four provinces, compared with 15 rupees per kg in January 2007, the WFP said.
Prices have since moderated to around 17 rupees but are expected to shoot up 40 percent or more in the coming months, according to grain industry officials.
“There will be a big crisis,” Haq said. (…)
Prices for rice, vegetables and cooking oil have also risen sharply, and the economic hardships faced by ordinary people played a big part in an election in February that resulted in President Pervez Musharraf’s political allies being thrown out of government.
The new coalition government, which took power last month, raised the support price it pays farmers to buy wheat to ensure adequate supplies, but Haq said the move would result in sharply higher flour prices in months ahead.
The consumer price index, a key indicator of inflation, rose 11.25 percent in February from a year ago, mainly due to food prices.
Due to the previous administration’s reluctance to reduce subsidies for food and fuel, the government is saddled with a widening fiscal deficit. While wanting to alleviate the hardship of the poor, the new government will face some painful economic choices. ($1 = 62.85 Pakistani rupees) (Editing by Simon Cameron-Moore and Alex Richardson)”
Pakistan was not particularly well off before food prices shot up. Its GDP per capita was well below $1,000/year. But half the population facing food insecurity is another thing entirely. Likewise, a decline in purchasing power of 50%. The poor here didn’t have much purchasing power to start with.
And Pakistan is not alone. This is happening all over the developing world. It’s worth keeping an eye on, and making a donation if you have the money.
