In connection with today's session on food price crisis, we did some background research in Pakistan, we interviewed a North American consumer and we provide you here with an intersting video produced by the BBC in collaoration with IFAD.
Here is what we found
FOOD PRICE CRISIS IN PAKISTAN
The global rise in food prices in 2008 had a severe effect on Pakistan’s economy, especially on the poorer segment of its population. This was in part because it was compounded by an earlier domestic rise in food prices. In recent years, rising domestic prices of food have been the principal component of a steadily rising overall inflation rate. Pakistan has been in economic difficulty well before either the global food price rise or the international recession. Since the third quarter of 2007, overall inflation had increased to over 15 per cent; it is currently around 20 per cent. Food prices rose by over 30 per cent in 2008 as a result both of increased international food prices and massive rises in oil prices.
In May 2008, IFAD’s Pakistan country team conducted a small-scale survey in rural areas where IFAD-supported projects operate to understand the impact of the food crisis on project participants and their coping strategies.
The survey covered 14 districts in all four provinces of Pakistan as well as Azad Kashmir and the Northern Areas.
The rationale for the survey was to obtain qualitative information on household responses to the crisis, especially changes in spending and consumption.
Economists estimate that rising food prices impact not only poor people but approximately more than 40 per cent of rural population.This is confirmed by the survey. The most affected are those who need to purchase large amounts of wheat and essential food for household consumption. Families in these circumstances are diverting resources originally allocated for health and education to purchase food. Quality and quantity of consumption is declining, and indebtedness is rising.
Production And Purchase Of Food
Pakistan is still referred to as a ‘wheat economy’. The most important single food item in rural Pakistan is wheat, either in grain form or as flour (“atta”). Rice is considered a luxury rather than an essential part of the diet. As with the current crisis, when inflation in rice prices has overshot wheat, rice is likely to be omitted and substituted by wheat.
The number of respondents who purchased wheat in 2008 increased from 65.7 to 79.0 per cent compared to 2007.
Purchasing wheat when there is not enough for household consumption is not merely a function of income; wheat availability varies from region to region. According to 73.8 per cent of respondents, wheat was available locally. About 13.8 per cent of respondents have no access to local wheat while for 3.8 per cent of respondents wheat is available locally occasionally. Unsurprisingly, the latter two categories were clustered in remote and mountainous regions.
In wheat-deficit households, 63 per cent of respondents were able to purchase wheat while 37 per cent did not have the financial means. Almost two-thirds of wheat growers said that they were growing wheat to secure food for their families. However, about 42 per cent produced less wheat in 2008 due to scarce and untimely rains. Some respondents acknowledged that the change in global patterns of weather has deep repercussions for Pakistan’s agriculture production.
About 15 per cent of respondents growing wheat on irrigated land faced scarcity of water. High and rising costs of fertilizers, seeds and electricity, reduced soil fertility, and unavailability of modern agriculture techniques were among other reasons for low yields. Very high prices of agricultural equipment and materials, lack of planning to cultivate land, costly labour and fuel charges also reduced the production. This situation will be exacerbated as prices and interest rates have risen sharply and credit is less easily available in the current economic climate.
Health And Nutrition
The declining status of household health and nutrition is captured by responses to the following questions:
How often did you eat meat or chicken? (last year vs. this year, latter in brackets)
Of all respondents only one person said that he ate chicken daily, 32.6 per cent (29.8) ate chicken less than once a month, 31 per cent (25) once a week, while 16.7 per cent (13.1) fell in between. A total of 18.8 per cent (29.8) said they ate chicken very seldom, as on feast days. This is a very clear downward trend.
Do you and your family eat your fill?
A total of 56.2 per cent said that they did while 27.9 per cent replied “mostly”, 10.7 per cent said sometimes and 3.8 percent seldom.
Do you have more to eat now or earlier?
To this critical question, 50 per cent responded that they had more to eat earlier, 21.2 per cent replied they had enough for their needs although more was available earlier, and 23.1 per cent said they had the same amount.
Is your family’s health better now than in early times?
A total of 64 per cent were of the opinion that their heath was better earlier, and 17.5 per cent said health was better now. However, 18.5 per cent felt that their and their family’s health was same as before.
Incomes, Prices And Indebtedness
Fifty per cent of the respondents reported lower incomes in 2008 than in previous years. The reasons included low rainfall and water shortages, inflation and rapid price hikes reducing purchasing power, deteriorating health conditions and unavailability of employment opportunities.
About 40 per cent of respondents whose incomes increased, attributed this increase to the use of modern agricultural technology and some others, to the increase in their livestock holdings, which shows that IFAD partner support organizations’ community level programmes have had some success. (I do not understand the previous sentence.) Others replied that job promotions/increments, a rise in pensions and better economic planning had increased their incomes. A few people from business backgrounds said that due to increases in the prices of products their incomes have increased.
Overall, 82 per cent of respondents noted that prices of necessities other than food have also risen and this further reduced their purchasing power.
About 41.4 per cent of respondents borrowed money in 2007, about two-thirds of them from IFAD partner support organizations and the rest borrowed from shopkeepers/middlemen, extended families and biradari (sub-ethnic lineage group). Fewer than 6 per cent had access to banks. Loans from shopkeepers and middlemen are usually disadvantageous to the borrower, and loan conditions worsen in bad times. A total of 18.2 per cent of respondents were unable to return the borrowed amount. For support organizations offering microcredit with timely return rates of well over 90 per cent, the almost doubled rate of default is very significant. In response to the question “did you bought food items on credit”, 36.4 per cent of respondents said yes and 13.6 per cent said no. Fifty per cent of respondents chose not to respond to this question. This is very significant since cultural factors prescribe non-response on the basis of pride.
Coping With Increased Food Prices
The question “What would help you to cope with the increase in food prices?” was included for qualitative responses. A common reply was “We’ll cut our stomachs”, meaning “we’ll eat less”. However, there were discussions on causes of higher food prices and remedies. Two main remedies e
merged:
• Individual austerity measures
• government measures to ensure social welfare and food security
To cope with increasing food prices, people felt they would have to cut down their expenditures to save more money to meet their food needs. The participants stressed the need to save more and seek other sources of income to replenish their quickly eroding purchasing power. They identified the main new sources of income as raising cattle and poultry farming as well as acquiring different vocational skills through training and working longer hours and making greater effort.
The respondents felt that the government could mitigate the pressure of rising food prices through measures such as the provision of subsidized food to the needy, free medical treatment, free education, training, availability of microcredit to lower- income populations, employment generation for poor people, subsidies on agro-products, and strict control on hoarding and artificial scarcity of food.
Conclusions
Survey results support the view that the food crisis severely exacerbates the economic crisis, and affects far more people than the poorest and poor ones. It is also having a negative impact on household health and nutrition, and a particularly adverse impact on households that do not produce sufficient staples to meet their needs and must either purchase them or do without. As NHDR shows, households that do not have a member earning substantially from some other source (for example through migration remittances) are also worse off. Moreover, the crisis has deepened as increases in oil prices drove inflation higher: because of its own financial constraints, the government has raised oil product prices when prices rose, but has not passed on the benefits of the later fall in petroleum prices to the consumer.
See also http://www.slideshare.net/aghaimranhamid/joint-presentation-food-crisis-in-pakistan-april-08
Interview with a North American Consumer
In connection with the APR 08 Session on Food Prices we interviewed Allison Hewlitt from Ottawa to know how changing food prices were affecting her.
Allison buys her food directly from producers who live within a 100 km radius of her home in Canada. She buys locally because then she knows that she has the freshest possible food. Supporting local farmers and the local economy is also a benefit that she likes to help create.
Allison says that prices have risen in the last 12 months, but not by very much.
She would attribute the price increases that she has faced to the increased input costs from the farmers.
As she only buys from local producers she has no basis of comparison from which to say whether increases made by local farmers are less or more than the increase faced by consumers nearby who shop in local supermarkets.
The question remains, are producers or intermediaries the major source of retail price increases.
Are you interested in what IFAD and the BBC produced on this issue? Check out the video they produced at the following url http://blip.tv/file/1818663/
Here is what we found
FOOD PRICE CRISIS IN PAKISTAN
The global rise in food prices in 2008 had a severe effect on Pakistan’s economy, especially on the poorer segment of its population. This was in part because it was compounded by an earlier domestic rise in food prices. In recent years, rising domestic prices of food have been the principal component of a steadily rising overall inflation rate. Pakistan has been in economic difficulty well before either the global food price rise or the international recession. Since the third quarter of 2007, overall inflation had increased to over 15 per cent; it is currently around 20 per cent. Food prices rose by over 30 per cent in 2008 as a result both of increased international food prices and massive rises in oil prices.
In May 2008, IFAD’s Pakistan country team conducted a small-scale survey in rural areas where IFAD-supported projects operate to understand the impact of the food crisis on project participants and their coping strategies.
The survey covered 14 districts in all four provinces of Pakistan as well as Azad Kashmir and the Northern Areas.
The rationale for the survey was to obtain qualitative information on household responses to the crisis, especially changes in spending and consumption.
Economists estimate that rising food prices impact not only poor people but approximately more than 40 per cent of rural population.This is confirmed by the survey. The most affected are those who need to purchase large amounts of wheat and essential food for household consumption. Families in these circumstances are diverting resources originally allocated for health and education to purchase food. Quality and quantity of consumption is declining, and indebtedness is rising.
Production And Purchase Of Food
Pakistan is still referred to as a ‘wheat economy’. The most important single food item in rural Pakistan is wheat, either in grain form or as flour (“atta”). Rice is considered a luxury rather than an essential part of the diet. As with the current crisis, when inflation in rice prices has overshot wheat, rice is likely to be omitted and substituted by wheat.
The number of respondents who purchased wheat in 2008 increased from 65.7 to 79.0 per cent compared to 2007.
Purchasing wheat when there is not enough for household consumption is not merely a function of income; wheat availability varies from region to region. According to 73.8 per cent of respondents, wheat was available locally. About 13.8 per cent of respondents have no access to local wheat while for 3.8 per cent of respondents wheat is available locally occasionally. Unsurprisingly, the latter two categories were clustered in remote and mountainous regions.
In wheat-deficit households, 63 per cent of respondents were able to purchase wheat while 37 per cent did not have the financial means. Almost two-thirds of wheat growers said that they were growing wheat to secure food for their families. However, about 42 per cent produced less wheat in 2008 due to scarce and untimely rains. Some respondents acknowledged that the change in global patterns of weather has deep repercussions for Pakistan’s agriculture production.
About 15 per cent of respondents growing wheat on irrigated land faced scarcity of water. High and rising costs of fertilizers, seeds and electricity, reduced soil fertility, and unavailability of modern agriculture techniques were among other reasons for low yields. Very high prices of agricultural equipment and materials, lack of planning to cultivate land, costly labour and fuel charges also reduced the production. This situation will be exacerbated as prices and interest rates have risen sharply and credit is less easily available in the current economic climate.
Health And Nutrition
The declining status of household health and nutrition is captured by responses to the following questions:
How often did you eat meat or chicken? (last year vs. this year, latter in brackets)
Of all respondents only one person said that he ate chicken daily, 32.6 per cent (29.8) ate chicken less than once a month, 31 per cent (25) once a week, while 16.7 per cent (13.1) fell in between. A total of 18.8 per cent (29.8) said they ate chicken very seldom, as on feast days. This is a very clear downward trend.
Do you and your family eat your fill?
A total of 56.2 per cent said that they did while 27.9 per cent replied “mostly”, 10.7 per cent said sometimes and 3.8 percent seldom.
Do you have more to eat now or earlier?
To this critical question, 50 per cent responded that they had more to eat earlier, 21.2 per cent replied they had enough for their needs although more was available earlier, and 23.1 per cent said they had the same amount.
Is your family’s health better now than in early times?
A total of 64 per cent were of the opinion that their heath was better earlier, and 17.5 per cent said health was better now. However, 18.5 per cent felt that their and their family’s health was same as before.
Incomes, Prices And Indebtedness
Fifty per cent of the respondents reported lower incomes in 2008 than in previous years. The reasons included low rainfall and water shortages, inflation and rapid price hikes reducing purchasing power, deteriorating health conditions and unavailability of employment opportunities.
About 40 per cent of respondents whose incomes increased, attributed this increase to the use of modern agricultural technology and some others, to the increase in their livestock holdings, which shows that IFAD partner support organizations’ community level programmes have had some success. (I do not understand the previous sentence.) Others replied that job promotions/increments, a rise in pensions and better economic planning had increased their incomes. A few people from business backgrounds said that due to increases in the prices of products their incomes have increased.
Overall, 82 per cent of respondents noted that prices of necessities other than food have also risen and this further reduced their purchasing power.
About 41.4 per cent of respondents borrowed money in 2007, about two-thirds of them from IFAD partner support organizations and the rest borrowed from shopkeepers/middlemen, extended families and biradari (sub-ethnic lineage group). Fewer than 6 per cent had access to banks. Loans from shopkeepers and middlemen are usually disadvantageous to the borrower, and loan conditions worsen in bad times. A total of 18.2 per cent of respondents were unable to return the borrowed amount. For support organizations offering microcredit with timely return rates of well over 90 per cent, the almost doubled rate of default is very significant. In response to the question “did you bought food items on credit”, 36.4 per cent of respondents said yes and 13.6 per cent said no. Fifty per cent of respondents chose not to respond to this question. This is very significant since cultural factors prescribe non-response on the basis of pride.
Coping With Increased Food Prices
The question “What would help you to cope with the increase in food prices?” was included for qualitative responses. A common reply was “We’ll cut our stomachs”, meaning “we’ll eat less”. However, there were discussions on causes of higher food prices and remedies. Two main remedies e
merged:• Individual austerity measures
• government measures to ensure social welfare and food security
To cope with increasing food prices, people felt they would have to cut down their expenditures to save more money to meet their food needs. The participants stressed the need to save more and seek other sources of income to replenish their quickly eroding purchasing power. They identified the main new sources of income as raising cattle and poultry farming as well as acquiring different vocational skills through training and working longer hours and making greater effort.
The respondents felt that the government could mitigate the pressure of rising food prices through measures such as the provision of subsidized food to the needy, free medical treatment, free education, training, availability of microcredit to lower- income populations, employment generation for poor people, subsidies on agro-products, and strict control on hoarding and artificial scarcity of food.
Conclusions
Survey results support the view that the food crisis severely exacerbates the economic crisis, and affects far more people than the poorest and poor ones. It is also having a negative impact on household health and nutrition, and a particularly adverse impact on households that do not produce sufficient staples to meet their needs and must either purchase them or do without. As NHDR shows, households that do not have a member earning substantially from some other source (for example through migration remittances) are also worse off. Moreover, the crisis has deepened as increases in oil prices drove inflation higher: because of its own financial constraints, the government has raised oil product prices when prices rose, but has not passed on the benefits of the later fall in petroleum prices to the consumer.
See also http://www.slideshare.net/aghaimranhamid/joint-presentation-food-crisis-in-pakistan-april-08
Interview with a North American Consumer
In connection with the APR 08 Session on Food Prices we interviewed Allison Hewlitt from Ottawa to know how changing food prices were affecting her.
Allison buys her food directly from producers who live within a 100 km radius of her home in Canada. She buys locally because then she knows that she has the freshest possible food. Supporting local farmers and the local economy is also a benefit that she likes to help create.
Allison says that prices have risen in the last 12 months, but not by very much.
She would attribute the price increases that she has faced to the increased input costs from the farmers.
As she only buys from local producers she has no basis of comparison from which to say whether increases made by local farmers are less or more than the increase faced by consumers nearby who shop in local supermarkets.
The question remains, are producers or intermediaries the major source of retail price increases.
Are you interested in what IFAD and the BBC produced on this issue? Check out the video they produced at the following url http://blip.tv/file/1818663/
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