Thursday, June 5, 2008

The blame game of global food crisis

We all know that the prices of food stuff has increased in a past few months.. especially since Feb, it has started hitting our wallets. I was surprised the other day when i has to get a bag of rice for close to $27!! that's crazy what will we eat if its gonna be this expensive??
And Mr. Bush the favorite whipping boy the press went on to say that increase in demand from India and China has lead to the increase in the prices..Poor fellow he is no economist to say something like this. He will repeat what the American media has been harping for some time now..Even respected news papers like Wall Street Journal published a string of articles blaming India and China for causing the pain in their wallets. How silly. Are there no economist with wall street journal?? After reading so many pieces over a period of time i started questioning my own judgement, the chances that my belief that the causes of food price raise is else where going wrong was slim, very slim; But how can still stick on get my daily dose of news from a questionable publisher who has been churning our unsubstantiated news over and over again? Should i still stick on to the journal?? Well since we have subscribed for a long period (we got an excellent deal on that) i decided to keep it.
Nevertheless i did send out a letter to the editor. Now that FAO has refuted the hypothesis that India-China are behind the price raise, may be the American media will try and investigate the actual causes and try and pin it down.
This reminds me of The Economist and its coverage of Fidel Castro's letter last year criticizing American corn based bio-fuel policy.. I don't often look up to to Mr.Castro but on this issue, he is saner than most of those who ought to have been...

Here is what i wrote to wall street journal on the issue of India- behind the food price increase!!!


It is extremely unfortunate that the recent food price inflation is wrongly being attributed to India (China). The line of argument that is being pursued is that the burgeoning Indian middle class is fueling the price rise by changing their dietary pattern in favor of meats because of increasing wealth. It is even more unfortunate that a reputed journal like yours is also supporting the claims on a regular basis, almost in every article published on the issue. The argument is flawed on the following counts.
1) Indian dietary pattern is distinctly different from its western counterpart ;Where as in the West, meat has always been the center piece of the meal – the main course with cereal preparations, vegetables being the side dish, It is exactly the opposite in case of Indian meals. Rice/Wheat (others cereals as well) is the main course with meats and vegetables being on the side. The concept of eating just meats for meals is unknown in most parts of India for most of the population.
2) The idea of President Bush (also Ms Rice and various journalists working for your esteemed journal) that the Indian middle class being comparable to the whole of American population and thus is responsible for the increase in food prices is based on this above mentioned faulty premise. It is like drawing conclusion about a pear based on the data of an apple.
3) Despite the growth story, the so called prosperity of the nation, Indian nutritional standards remains poor. A large section of the population is still able to afford only food good enough to keep the body and soul together.
4) According to latest report of National Sample Survey Organization on household expenditure, the average monthly consumption of cereal is well below 12 kilograms per person, per month. It is as low as 9 kilograms for the lowest expenditure group, given that cereal still remains the mainstay of the Indian diet, many a times they are also the only nourishment one gets.
5) The commodity import data of India also shows that there has not been a step up in the imports of food grains so as to make a difference to the global prices. It shows that the import of bulk consumption goods (food) for the year 2006-07 was about Rs 14889.61 crore, not very high from 14,120.05 crores during 2003-04. The figure includes imports (thereby the demand) for commodities like cereal preparation, pulses, rice, sugar, wheat vegetable oils and other cereals. In real terms it translates into Rs 4223.044 crores for the year 2006-07 and Rs 4266.907 crores (base year 1986-87/consumer price index for agriculture labor). That is the imports during the year 2003-04 were marginally higher than that of the year 2006-07. Indian’s demand for food is more or less still dictated by the weather conditions rather than the upward mobility of a consumerist society.

6) While more than half the expenditure of rural households and close to 40% of the urban households was food related, just about 2.3% of it in urban and 4% of it is attributed to egg, poultry, fish meats and meat products. In comparison, 4% of it in urban and 6% in rural areas was on vegetables. This seems to indicate preference for vegetables over non-vegetarian food products