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Wednesday, March 19, 2008
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WFP fears political, social unrest for price hike

The rising prices of food items, especially rice, may cause political instability in the country since poorer households spend up to 80 percent of their income on food, fears the World Food Programme (WFP).

The UN agency said the possibility of political, economic and social unrest is growing as the price of food is rising much faster than people's wages in Bangladesh along with regional neighbours like Pakistan and Afghanistan.

"We are very concerned in Pakistan, Bangladesh and in Afghanistan and we have already seen evidence of when higher food prices hit specific local areas there are often riots and civil disturbances...There is great cause for concern," WFP Asia spokesman Paul Risley told the media last week.

Planning Commission sources said they estimate rural households could be spending up to 80 percent of their incomes on food while the percentage for the ultra-poor is likely to be higher.

Although there are no current figures on the percentage of income spent on food, the poorest households could be just surviving on "rice and salt" in case a large percentage of their income is spent on food alone, Bangladesh Institute of Development Studies (BIDS) Research Director Asaduzzaman told The Daily Star.

The poorest households were spending nearly 70 percent of their incomes on food in 2005, said Asaduzzaman, so as prices have risen abnormally it would not be surprising to see their expenditure on food go up to 80 percent.

Rise in food prices is causing political instability worldwide, not just in Bangladesh. But, Bangladesh has its own set of concerns, WFP Bangladesh country representative Douglas Broderick told The Daily Star.

"We are very worried about the percentage of household income being spent on food," said Broderick, adding that the biggest concern is with the poor and ultra-poor households.

"There is a serious food situation that we need to monitor," he said, however stressing, "We are not in a famine situation."

Broderick said they have received indications that the upcoming Boro crop would be "good" and he is hopeful the crisis will not spiral out of control because the markets are operating "well".

The government is currently in a process of importing rice from India, but negotiations have hit a snag due to high prices.

Finance Adviser Mirza Azizul Islam said the government is also trying to import rice from Southeast Asian countries and they are trying to negotiate with India for a lower price.

According to the Trading Corporation of Bangladesh, prices of rice have gone up by 25-30 percent in the country over the last few months and 67 percent over the last year.

According to WFP figures, internationally the price has gone up around 50 percent over the past year.

WFP officials say global food prices have been driven up, in part, by the astronomic rise in the price of oil which has pushed up a whole set of agricultural costs such as fertiliser and transport.

The price of coarse rice, which is largely consumed by poorer households, has been much higher, exacerbating the problem. Moreover, costs of imports from India have also risen due to the appreciation of the rupee against the taka.

But, unlike other countries such as India, Bangladeshi taka has not been appreciated enough against the US dollar and has failed to offset the rising price of oil.

In stark contrast, the real income in Bangladesh has dipped by 2-5 percent last year, according to BIDS. The worst affected in rural areas have seen their incomes drop by more than 5 percent.

In Bangladesh, like in other parts of the world, crops and harvests were wrecked by natural disasters, namely two countrywide floods and cyclone Sidr which devastated the south-western coast.

WFP Executive Director Josette Sheeran told Time recently that the organisation might have to cut its relief programmes unless it raises an extra $500 million this year as the WFP expects food prices to remain high for years.

"We are seeing a new face of hunger. People who were not in the urgent category are now moving into that category," said Sheeran.

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