- Rate of increase in food prices at 321% ahead of war-torn nations
- World bank avails a 30 billion fund to alleviate food inflation
- Measures to contain the out-of-control food inflation
At 321%, Zimbabwe tops the World Bank's (WB) list of countries severely afflicted by food inflation, among war-torn Lebanon and Venezuela, whose political and economic crises have left worrisome rates of malnutrition.
The rate of increase in food prices is known as "food inflation." Food inflation impacts low-income workers the most since they spend a large amount of their income on food. Several factors have an impact on the food supply, which in turn affects pricing.
More individuals fall into poverty as a result of food becoming pricey and inaccessible to those who are already struggling due to price hikes. Other issues, such as food fraud, coexist with food inflation.
Despite a brief lull between 2009 and 2013, an economic crisis that has been ongoing for more than two decades has gotten worse. While wages are static, grocery store food prices have increased. The government, on the other hand, has persisted in disputing expert inflation estimates that are typically more than 100% higher than those provided by its Finance Ministry.
Due to the risks already noted as a result of food inflation, the WB has made up to US$30 billion available over the next 15 months. The $30 billion fund will be utilized for social protection, nutrition, and the agricultural sector.
The World Bank Group is making up to $30 billion accessible over a period of 15 months in areas like agriculture, nutrition, social protection, water, and irrigation, according to the WB in its report. This is part of a comprehensive, global response to the ongoing food security crisis.
“This financing will include efforts to encourage food and fertilizer production, enhance food systems, facilitate greater trade, and support vulnerable households and producers. The $2,3 billion Food Systems Resilience Programme for Eastern and Southern Africa, helps countries in Eastern and Southern Africa increase the resilience of the region’s food systems and ability to tackle growing food insecurity. The program will enhance inter-agency food crisis response and also boost medium and long-term efforts for resilient agricultural production, sustainable development of natural resources, expanded market access, and a greater focus on food systems resilience in policy making.”
Even though having access to food is a fundamental human right, Zimbabweans nevertheless experience extreme food insecurity. Food crises have been provoked by the current rise in food costs, and in other nations, disgruntled citizens have been the driving force behind riots over the past 20 years.
The risks of being dependent on imports have been underscored by recent increases in food prices, which have been felt most acutely in those nations that depend on trade for their food supplies. These dangers will only rise, especially when global food trade patterns start to be impacted by climate change. This is why Zimbabwe’s case has been so dire because of the recent drought.
Is trade in food bad for food security, and should countries look to policies to support domestic production? This week, grain millers applauded the government's move to halt the importation of maize meal to shield them from "opportunists" charging unjust prices. Tafadzwa Musarara, the chairperson of the Grain Millers Association of Zimbabwe (GMAZ), stated during a meeting for members of the Northern Region that the suspension of the import licenses will allow for fair competition on the market.
However, it must be remembered that the main causes of insecurity include conflict and war, severe weather, and economic shocks, including those brought on by COVID-19. Therefore, it may be said that while more trade won't be sufficient to address all of the problems, it can contribute to greater food security.
Domestic food production versus food trade?
There are drawbacks to increased food trading. Many developing nations are experts at exporting cash crops rather than importing basic staples for domestic use, making them net food importers with all the associated risks.
Many customers hold the opinion that smaller, local producers are more reliable and more likely to provide goods of a higher caliber, especially since they have better environmental records and incur fewer "food miles" and transportation costs. In affluent nations, there is also a rising demand for regional goods, and local food movements are expanding to assist small farmers and boost domestic production.
For those nations where soy cultivation has a comparative advantage, particularly the Brazilian Amazon, the rapid expansion of soy production has resulted in significant land modification. Deforestation affects the provision of a variety of ecosystem services provided by forests, including carbon storage, rainfall production, local communities' means of subsistence, and serving as a hotspot for biodiversity.
What has been the effect of trade liberalization?
Global trade in goods has grown quickly since the Second World War, notably in the last three decades. Today's agricultural trade is valued at over $1.1 trillion, and the world's food system has developed into one that is linked and complex.
For its overall food needs, every nation in the world depends to some extent on commerce. Many commodities are produced in a small number of countries that export them to numerous other countries, some of which also re-export.
For instance, the value of the worldwide soybean trade has increased approximately fivefold since 2000, and the volume has increased to almost 200 million tonnes, more than double what it was in 2000. It is currently the most traded agricultural product, with shipments to China mostly coming from Brazil, the US, and Argentina. As a result of the EU's enlargement, trade liberalization, the removal of border checks on the flow of goods, and technical and fiscal hurdles to joining the single market have had a positive impact on commerce and increased food production in the "new" EU member states like Poland.
Over the past 60 years, the role of international markets in ensuring food security in developing countries has increased. A lot of food is imported into Africa, where there are major problems with food insecurity.
Approximately 85% of food consumed between 2016 and 2018 came from outside of the continent. Africa's net food imports are anticipated to triple by 2025 as a result of its expanding population, despite a one-third increase in undernourishment. From 5% in 1995 to 32% in 2019, the Caribbean's food imports as a percentage of merchandise imports increased dramatically. In the trade of basic foods, only 4 of the 12 developing regions display a positive net balance.
What are the competitive advantages of the food trade?
Growing international trade has aided in getting food from places where it can be produced effectively to places where it is needed. While some nations depend on imports because they lack the resources or environment to grow enough food or a particular crop for their populations, others are more competitive because they have advantages like a favorable climate or availability of labor inputs.
Access to food that can be produced more profitably and efficiently elsewhere, as well as to seasonal produce that we want all year long, such as fruit and vegetables, is made possible by globalization. It makes sense for a nation to grow items where it has a competitive edge and where it is most equipped to produce, export, and import things it cannot grow as well in a stable world.
As a result of competitive advantages and agricultural policies supporting domestic production, certain regions become the "breadbaskets" for the rest of the globe. Efficiency gains and price reductions follow from this. All people could get cheaper food through a system of global trade. Additionally, it enables nations with sizable agricultural economies to export and profit from this; agricultural exports may play a crucial role in the economic development of a nation.
The global food system benefits greatly from trade, but as recent events have demonstrated, there are risks as well. Zimbabwe must therefore implement policies that can further aid in containing the out-of-control food inflation while maintaining a healthy balance between its domestic output and reliance on imports.
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