Government will closely monitor food price situation

[posted 25 April 2008, 1500]

Government is closely monitoring the situation regarding rising food prices  and will take action as necessary to minimise hardship to the poor, says Finance Minister Mahendra Chaudhry.

Record oil and food prices are creating crises situations all over the world. It is not just Fiji that is affected, said Mr Chaudhry who is also Minister for  National Planning, Sugar Industry and Public Utilities.

The world food situation is so critical that the United Nations, the IMF and the World Bank are warning of possible social unrest in poor third world countries unless immediate steps are taken to relieve the shortage of staple food items and to bring down prices.

Oil prices have jumped 125% in one year. Food prices have climbed 83% worldwide over the past three years, according to World Bank estimates.

Wheat prices have soared 130% in just one year, and the price of soy products 87%.

The price of rice has seen a massive hike of 300%, in the past six months.

Dairy products have been similarly affected. In Fiji, the price of imported butter went up 50% in the past three months; powdered milk and liquid milk prices have also risen significantly.

“The people of Fiji will have to brace themselves against continuing shortage of staple food items and high world prices,” Mr Chaudhry said.

“Government has, and will do all it can, including reducing duty on imported staples, to soften the impact of the hardship on the poor but even our hands are tied because this is a global food crisis.

“The only way we can fight this global phenomenon is to reduce imports and grow as much of our own food as we can,” he said.

A week ago, a panel of UN experts warned that to avoid a social explosion from rising food prices, major agricultural countries must change their policies. The UN experts are calling for the adoption of food production techniques less dependent on fossil fuels, the use of locally available resources, natural fertilisers and traditional seeds.

In Europe inflation in March 2008 jumped to a high of 3.6% as oil and food prices soared - compared to an inflation rate of just 1.9% a year ago.

In the US, inflation in March doubled from previously forecast figures as a result of escalating energy and food prices.

In India, inflation rose to a three-year high of 7.41% in the 12 months to March and in China food prices have gone up 21% in one year. Australia has witnessed a 41% increase in food prices generally.

All over the world measures are being undertaken to combat the global food crisis intensified by major producers banning foreign sales to meet their own domestic demand.

Monday last week Kazakhstan, one of the world’s biggest wheat exporters, stopped all foreign sales of wheat.

Rice prices shot to a record high that same day after Indonesia stopped its farmers from selling the grain abroad. Major rice producers India, Thailand and Vietnam have already banned rice exports.

The current world food crisis is partly due to the fact that countries are converting grains such as corn and wheat into fuel (ethanol) to offset high oil prices.

Another reason, is the removal of agricultural subsidies under the World Trade Organisation’s liberalisation policy. Severe drought conditions in various parts of the world have also had a devastating impact on food crops. Australia and New Zealand are close examples.

In Budget 2008, the Interim Government has placed heavy emphasis on boosting agricultural production. It offers attractive incentives for farmers and entrepreneurs wishing to diversify into market gardening and the production of other food crops.

Our “Help North” policy also offers encouraging opportunities for those keen to engage in agricultural development projects in the North.

Mr Chaudhry called on everyone with access to land to grow as much food as possible using natural fertilisers. People can grow vegetables and root crops in their own backyards for family consumption.

Farmers should start growing rice, root crops, corn and pulses to replace or supplement imported rice and wheat.