Bio-fuel production causes hike in world food commodity prices: growers turn to maize cultivation

Bio-fuel production in big economies of the world is the basic reason behind increase in prices of food commodities in international market, as the growers in Pakistan have also started taking interest in cultivating maize that is the basic raw material of bio-fuel.
This was observed by Secretary of Food, Agriculture and Livestocks Muhammad Ziaur Rehman at the launching of the World Bank report on agriculture here on Friday. World Bank Country Director for Pakistan Yusupha Crookes, Sector Manager of World Bank Adolfo Brizzi, Chairman of Pakistan Agriculture Research Council M.E.Tusneem, member, Planning Commission Dr Kausar A. Malik, Chief Executive Officer (CEO) of Aga Khan Rural Support Programme Izhar Ali Hunzai and Chairman of Agrimall (Pvt) Ltd Afaq Tiwana were among the participants.
Zia said that food security of a large number of nations across the globe was at stake because of recurrent food shortages and price hike. In fact, under a very complex food commodities supply and demand situation, food security was becoming a formidable challenge, especially when the main grain producing countries were resorting to bio-fuel production creating a devoid between countries striving for food security and countries ensuring energy security through bio-fuel production.
The unpecedented increase in energy and DAP fertilisers prices were impacting the sustainability of agriculture production, he added. A vast, varied and rapidly changing agriculture sector offered new opportunities to hundreds of millions of rural poor to move out of poverty by engaging them in small holders farming, animal husbandry and employing in high value agriculture and non-farm economy, he said.
"Three out of four people in developing countries live in rural areas. Also to tackle poverty, massive investment in rural education is required for skill development and non-farm employment generation", he said.
"Pakistan is substantially investing for building capacities and expertise in the arena of bio-tech research and development (R&D). Globalisation has opened new export opportunities and has increased the flow of foreign capital and technology", he added.
Zia said Pakistan had been advocating large tariff reductions and minimising the number and extent of the exemptions to the normal tariff reduction formula.
"A major US study has estimated that the outcome of the Doha Round negotiations could result in commodity price increases of between five and 35 percent, while as a result of high international prices, Doha Round can generate between seven perecnt and an 18 percent increase in the value of its agricultural output", he disclosed.
He stated that Doha Round would not result in any real cuts in domestic support, but merely maintained the current spending levels. The highly supported commodities would continue to be protected, while overall agricultural tariffs might decline, distortions in the tariff structure would increase. The most highly protected commodities would be subject to the smallest tariff cuts, he said. "Pakistan can take advantage of the new opportunities, created by the Doha Round through higher commodity prices and better market access", he said.
He said Pakistan had increased investment in agriculture sector manifold and a portfolio of ongoing 63 projects, costing Rs 140 billion, was an illustration of this fact."We are committed to achieve the Millennium Development Goal of halving the hunger and poverty by 2015", Zia explained.
Dr Kausar said that if handled properly, dearer food was once in a generation chance to narrow income disparities and to wean rich farmers from subsidies and help poor ones. "Pakistan has made significant progress as concerns the strength of livestock. In 1996, total herd strength across the country was 110.22 million that increased to 142.88 million in 2006, causing an increase of 30 percent", he stated.
Dr M E Tusneem said that the government had to cope with many challenges like food security and rural poverty, management of natural resources, climate change and the improvement of R and D system to develop agriculture sector according to the international market.
"Wheat production per acre is 27 maund in Pakistan that can be increased to 30 mounds per acre by using modern technology fertilisers. It is the beginning of the revival of agriculture and the potential productivity in Asia has increased more then ever", he said. He stated that agriculture was inversely proportional to poverty because with the increase in agriculture poverty would reduce. The government was plagued with such a situation that it could not give free hand to the farmers.
Adolfo Brizzi told the participants that if market were not deregulated, the private sector would not make investment. "With wheat and rice prices, hitting the pocketbooks of Pakistan's poorest citizens and with high energy prices and increasing water scarcity squeezing local farmers, a leading World Bank agriculture expert stressed the need for greater investment in agriculture in Pakistan", he said.
The report said that despite the fact that the agriculture sector could play enormous roles in spurring economic growth and employment, and in reducing poverty, over the past 20 years it suffered from neglect and under-investment around the world.
According to the report, the need for greater investment in agriculture in emerging economies like Pakistan, is vital to the welfare of 600 million rural poor living in those countries, mostly situated in Asia.
The report warned that the Millennium Development Goals of halving extreme poverty and hunger by 2015 would not be met unless the governments in developing countries and the international community reversed the trend of under-investment in the agriculture and rural sectors.
"A dynamic 'agriculture for development' agenda can benefit the estimated 900 million rural people in the developing world, who live on less than one dollar a day, most of whom are engaged in agriculture, "said Robert B.Zoeltick.
"We need to give agriculture more prominence across the board. At the global level, countries must deliver on vital reforms such as cutting distorting subsidies and opening markets, while civil society groups, especially farmer organisations, need more say in setting the agricultural agenda," he stressed.
"In emerging countries such as Pakistan, India, China, and Morocco, agriculture contributed an average seven percent to the growth in gross domestic product (GDP) between 1995 and 2005, though the sector accounts for about 13 percent of the economy and employs just over half the labour force. In many countries, slow growth in agriculture sector, coupled with a rapidly growing non-agriculture sector, has widened rural-urban income gaps creating social and economic tensions.
"On the other hand, rapid growth of urban incomes and demand for higher-value products also provide significant opportunities for faster agricultural growth and poverty reduction in these countries.
"As pointed out by Derek Byerlee, the principal co-author of the report, low agricultural productivity, unequal distribution of land and access to water, inadequate infrastructure, and poor public service delivery are among the key constraints, hampering more rapid growth of agricultural sector in Pakistan. "Increasing water scarcity, which is expected to worsen with climate change in the face of increasing demand for water, is another major concern." It said.
The report says agriculture can be an important source of growth, even in emerging economies like Pakistan, provided we improve the asset position of the rural poor, make small-holder farming more productive, competitive and sustainable, diversify income sources toward the labour market and the rural non-farm economy, and facilitate rural-urban migration with desirable developmental outcomes.
The emerging countries have the largest concentration of the world's poor, so the direct support through well-designed and well-governed employment schemes in rural areas, and well-targeted effective safety nets can reduce poverty, improve rural investment climate, and restore degraded natural resources, the report adds.
Yusupha Crookes, World Bank's Country Director for Pakistan stressed the relevance of the report for Pakistan. "During the last 12 months, Pakistan has witnessed unprecedented increases in the price of key food commodities, which have profound effects on poor and vulnerable people. There is an urgent need for increased agricultural productivity and effective safety net programmes to overcome these problems."
For its part, the World Bank was committed to increasing its support for agriculture and rural development, following a decline in lending in the 1980s and l990s. In 2007 financial year, commitments reached 3.1 billion dollars to all borrowing countries, marking increase for the fourth straight year, he said. The report also warns that global food supplies are under pressure from increased demand for food, feed, and bio-fuels, rising price of energy, increasing land and water scarcity as well as climate change, which, in turn, contribute to sharp increases in food prices and put millions of people at risk of falling into poverty.
In April this year, the bank proposed a new deal on global food policy, which 150 countries endorsed. The new deal embraces short, medium and long-term responses, including safety nets such as school feeding, food for work, and conditional cash transfers. It also calls for increased agricultural production; a better understanding of the impact of bio-fuels; and action on the trade front to reduce distorting subsidies and trade barriers.