EDITORIAL: The United Nations' (UN's) Food and Agriculture Organisation's (FAO's) warning that rocketing global food prices could 'foment further social unrest in countries already mired in political turmoil' must have rung very loud alarm bells in many capital cities of the world, including Islamabad where governments are struggling with the hangover of the pandemic and are unable to match their expenses with their incomes. Should food also become unaffordable, on top of everything else, not just for the very poor but also for much of the working classes, then surely there will be 'social unrest' the likes of which hasn't been seen in a very long time. The FAO has the UN's outreach and databases to draw from, which are the best on the shelf so it knows what it is talking about, and the fact that international food prices rose by about 40 percent this May, compared to the same period of last year, means there is very serious trouble down the road for countries that can no longer pull stimulus packages out of a well to make their troubles go away for at least another wave of the coronavirus.
And Pakistan is one such country. First of all, it's an outright shame that ours has always been an agriculture-driven economy yet an abnormal hike in international food prices is working against us, instead of exactly the opposite, in a very bad way. The government already has its hands full with trying to justify its expansionary experiment with the budget to the International Monetary Fund (IMF), and has admitted that last year's trade deficit and high food inflation owed to the last minute rush to pick wheat and sugar from the international market. So if it is forced to pay top dollar once again because there's food shortage at home and whatever is available at the shop comes at a very high price, then an ugly breakdown of the public peace is the first thing that it should factor into its calculations.
The main, and quite natural, problem is that poor countries aren't rebounding nearly as fast as rich countries, and with their national and individual incomes still very low while food becomes the most expensive it has been in 10 years, they are in something of a fix. What, after all, can they do when red-hot growth in China is predicted at 8.4 percent, with the US not far behind at 6.4 percent (both according to the World Bank, which also knows what it talks about), and both have combined to make even staple food for a big part of the world's population the most costly it has been in decades?
Not long ago Prime Minister Imran Khan led the third world's plea for writing off parts, if not all, of its debt. Yet even though some countries got some temporary relief from the G-7, everybody has already dismissed such hope as time-wasting wishful thinking. Therefore, all that countries like Pakistan can really do at this moment is dig in their heels and prepare to meet the wave of high food prices, followed by a wave of hunger-driven riots, as best they can. There's obviously no way that they can keep sprinkling tax breaks and incentives on the market, especially in our case considering our ambitious budget, so they will have to ration their resources.
They will also need to be quick on the draw because one of the reasons for the price explosion in food items is out-of-control freight charges. That clearly means that countries that delay their orders for too long, whether to test the local crop or because of sheer inefficiency in their government sectors, risk not just astronomical prices but also the prospect of missing out on the trade altogether. And that, of course, will do to unrest on the streets what fuel does to fire.
Such anomalies and abnormalities will persist beyond the pandemic. The global economy has just suffered an exogenous shock of very high magnitude. Unlike previous recessions, the one caused by it was not because any systemic fault lines were triggered, this was completely from outside the system. Therefore, it will take a while for the global economy to get its ducks in a row. Till then, poor countries need to be resilient enough to survive the food crisis that is brewing.
Copyright Business Recorder, 2021