I wonder whether the C-R-I-S-I-S projected in food sector is really a touch and go signal or a new window of growth and opportunity?
Recently I came across a piece of news which has reported “If every household in India hoards just one kg of wheat flour as a panic reaction due to food crisis and inflation , wheat flour will not be available in India----------- a flour famine ?. Quiet a revelation?
But what does it mean? Sceptics may alarm a warning bell about Malthusian theory of food crisis turning into reality? Unexpectedly, even the Indian Prime Minister, a seasoned economist, perhaps under “coalition compulsion” has reiterated once again in the Confederation of Indian Industry(CII) meet and implored upon for a “balancing act” in corporate remunerations to contain inflation and keep a socio-economic equity(which itself is not well defined).
And then rest of the job is done by M-E-D-I-A. Running panic mill and fear stories about food shortage and (Bad Capitalism?).
Undoubtedly food price across the globe have increased and it is the poor who are the worst hit when price increases, not only food price but essential commodities price, simply because a large percentage of their earnings is spent on essential commodities; but this time there is an indication that inflation is perhaps good and there is a positive aspect in inflation and I am of the opinion that it needs to be discussed and highlighted .
Economic activity across the world has increased manifold due to globalisation and especially India and China are the harbingers , more and more individuals have got gainful employment in these countries which means access to money and therefore access to food and other commodities, Hence a demand pull inflation. African countries like SierraLione, Sudan (Darfur) etc are an exception due to failure in institutions and governance system.
Other factors like “Farm to Fuel” Policy in the USA, Brazil and other countries perhaps is one of the reasons for food shortage but at the same time FAO has predicted increase in the global Rice Output by 1.8% and also increase in other food products.
In India, the reasons are different, supply side bottle necks in farm sector and more and more people having access to food are the main cause . Bharat Nirman Plus is one of the policy solutions in the long term and I personally feel that there is hardly which the Govt. should do in short run. Frequent changes in Money market by the central bank (RBI) will hamper the economic growth and populist actions like ban on future trading in agro commodities can not be of any help but a huge blow to farming community.
Solution lies in the Technology, Policy, Markets and public deliberations but definitely not in PANIC REACTIONS .This need to be highlighted and understood by all concerned.