Food Crisis and Farmers' Loan Waiving

2008: The Year of Global Food Crisis

Whether food scarcity, global warming, rocketing oil prices and the world population explosion are headinig towards the biggest crisis of the 21st century 'FOOD CRISIS" by pushing up food prices and spreading hunger and poverty from rural areas into cities ?

Experts say that for the first time in history the impact is spreading from the developing to the developed world.

More than 73 million people in 78 countries that depend on food handouts from the United Nations World Food Programme (WFP) are facing reduced rations this year. The increasing scarcity of food is the biggest crisis looming for the world.

The UN Food and Agriculture Organisation has warned that rising prices have triggered a food crisis in 36.

World Bank demands urgent action and the bank points out that global food prices have risen by 75% since 2000, while wheat prices have increased by 200%. The cost of other staples such as rice and soya bean have also hit record highs, while corn is at its most expensive in 12 years.

The increasing cost of grains is also pushing up the price of meat, poultry, eggs and dairy products. And there is every likelihood prices will continue their relentless rise, according to expert predictions by the UN and developed countries.If prices keep rising, more and more people around the globe will be unable to afford the food they need to stay alive, and without help they will become desperate. More food riots will flare up, governments will totter and millions could die.

Food scarcity means a big increase in the number of people going hungry (WFP). The WFP estimates it needs an additional $500 million to keep feeding the 73 million people in Africa, Asia and central America therefore by the middle of 2008 the reduced rations could be averted.

Age-old patterns of famine are also changing.

Of the 36 countries named last month as currently facing a food crisis, 21 are in Africa. Lesotho and Swaziland have been afflicted by droughts, Sierra Leone lacks widespread access to food markets because of low incomes and high prices, and Ghana, Kenya and Chad among others are enduring "severe localised food insecurity".

In India last year, more than 25,000 farmers took their own lives, driven to despair by grain shortages and farming debts. The spectre of food grain imports stares India in the face as agricultural growth plunges to an all-time low (India Today magazine).

Global demand for food will double by 2030 (The World Bank prediction) partly because the world's population to grow by three billion by 2050.

The rise in global temperatures caused by pollution is also beginning to disrupt food production in many countries. According to the UN, an area of fertile soil the size of Ukraine is lost every year because of drought, deforestation and climate instability.

Last year Australia experienced its worst drought for over a century, and saw its wheat crop shrink by 60%.

China's grain harvest has also fallen by 10% over the past seven years.

The UN Intergovernmental Panel on Climate Change has predicted that, over the next 100 years, a one-metre rise in sea levels would flood almost a third of the world's crop-growing land.

Accelerating demand for allegedly green biofuels and the world's growing appetite for meat have also been blamed for this crisis.

Meat is a very inefficient way of utilising land to produce food becasue it is delivering far fewer calories, acre for acre, than grain. On the hand the amount of meat eaten by the average demand by all developing countries has doubled since 1980.

The world's grain stocks are at their lowest for 30 years.

Another key driver is the soaring cost of oil, which last week topped $105 a barrel for the first time. As well as increasing transport costs, oil makes crop fertilisers more expensive.

According to the World Bank, fertiliser prices have risen 150% in the past five years. This has had a major impact on food prices, as the cost of fertiliser contributes over a quarter of the overall cost of grain production in the US, which is responsible for 40% of world grain exports.

This is a wake-up call. The choices we make now will determine whether we can feed ourselves in the future. If we get it right we can have a thriving food economy.

Farmers loan waiver a revolutionary step

The waiver of 40 million poor farmers loans is as a historic and revolutionary step.

The government announced a waiver of Rs 50,000 crore worth of loans to small and marginal farmers and a settlement scheme for other farmers that would cost the exchequer another Rs 10,000 crore.

Finance Minister P. Chidambaram had earlier announced a complete waiver of unpaid loans issued to farmers with holdings up to two hectares in his 2008/09 budget proposals in an effort to boost the agricultural sector.

Accoridng to Somnath Ballav, PwC’s executive director (tax and regulatory services):-

The money to fund the Rs 60,000-crore outlay is likely to come from the industry through different revenue mechanisms. The government has clearly set its sight on the ensuing elections as they have set a June 30, 2008 deadline for the loans to be waived.

Politicians fighting to corner credit for the Rs 60,000-crore farm loan waiver which may not have envisaged relief, with as many as 316 farmers in Vidarbha, 40 in Marathwada and 31 in western Maharashtra ending their lives since January this year. Activists working in these agrarian areas say that neither the intense build-up to the loan waiver nor its actual announcement has helped alleviate the misery of the farmers or take suicide off their minds.