Food prices at historic high

Nari, Normal

The National – Tuesday, February 8, 2011

WORLD food prices surged to a new high last month following rising trend for the seventh consecutive month, according to the United Nations Food and Agriculture Organisation (FAO).
And the recent catastrophic weather around the globe could add more pressure on the cost of food, an issue that has contributed to protests across the Middle East.
The index, a commodity basket that measures monthly changes in global food prices, averaged 231 points, topping the peak of 224.1 recorded during the last food price crisis in 2008.
This is the highest level since FAO started measuring food prices in 1990. Prices of all monitored commodity groups registered strong gains last month, except for meat which remained unchanged.
FAO has warned that the new figures showed that the upward pressure on world food prices is abating and these high prices are likely to persist in the months ahead.
This trend of high food prices, and the likely food shortages in the world, offers PNG a golden opportunity to be food secure and self-reliant. Besides, PNG should take advantage of the situation and improve on its agricultural productivity and production, especially in the food and livestock sectors.
This is possible as PNG has suitable climatic conditions and genetic diversity to produce a variety of food crops and access to improved farming technologies.
World leaders and international organisations are raising concerns with the current trend.
World Bank president Robert Zoellick has urged world leaders to “put food first” and wake up to the dangers of rising food price inflation.
“We are going to face a broader trend of increasing commodity prices, including food commodity prices,” he said.
FAO director-general Jacques Diouf said the rapid increase in hunger and malnourishment, since the food crisis of 2008, reveals the inadequacy of the present global food system and the urgent need for structural changes.
Some countries are likely to ban food export, especially for major commodities such as grains and cereals and essential oils. High food prices are likely to put upward pressure on domestic inflation in both the developed and developing countries. People would be badly affected from riots and protests, a scenario that is already unfolding in the Middle East.
Farmers are likely to go on strike in opposition to governments’ imposition of new export tax regimes in order to safeguard domestic food security. This would affect millions of people in all parts of the world.
During the last food price crisis in 2008, the World Bank estimated that about 870 million people in developing countries were hungry or malnourished. The FAO said the number had increased to 925 million.
The causes of increase are many, including tight supplies, unfavourable weather conditions, diverting land to non-food production (especially bio-fuels) and rising demand in emerging economies.
The bottom line reason appeared to be that the world has been consuming more food than it was producing. Simply, the world is not efficient in producing agricultural outputs, especially food commodities.
Also to be blamed is the long-term policy of encouraging cash crops and industrial crops at the expense of food crops. However, most importantly, the world is not investing enough in agriculture. The sector is grossly underinvested and underused. It is often misplaced in policy decision-making and development investments. And, PNG is very much in that category.
FAO stated that the key to long-term food security lies in boosting investment in agriculture.
“The food and economic crisis will have severe impact on millions of people in all parts of the world. The global food import bills could pass the one trillion dollar mark this year, a level not seen since food prices peaked in 2008.”
PNG should make use of this opportunity and not only produce enough for its own consumption but also for export to needy countries. In doing so, PNG could establish new food trade relationships and niche markets. Once established, it would be easier to continue and maintain such exports.
The time is right for it to happen. PNG has the advantage because of its huge resource base and potentials which are yet to be explored.
PNG has about six million people with enormous agricultural resources such as vast land mass, fertile soils and favourable climate for various types and kinds of crops.
PNG has a rich bio-diversity and a variety of food species, fruits and nuts, and cash crops. Farmers can grow various crops, including cereals and pulses, together with a range of livestock species. There are also abundant land and bio-mass, creating opportunities for bio-fuels as well.
PNG has made modest advances on the technology front in terms of improved varieties and practices for a range of agricultural commodities and environments.
There is a huge potential in applying modern bio-technology, processing techniques and value adding, and linking farmers to markets. Much of these can be achieved through science and technology with appropriate policy and capacity development.
This also means that there must be favourable policies towards agriculture with adequate investment. 
The global food crisis is a real golden opportunity for PNG not only to be food assured and self-reliant, but also to be prosperous through efficient agricultural production, downstream processing and exporting to the rest of the world.
And, this opportunity must not be allowed to slip by.