Friday, September 12, 2014


If FAO of the United Nations is to be believed, the World is heading for a food glut with some consequences on the agricultural community. It is a paradox that while almost half the world is suffering from hunger, here is a situation where the food grains availability is 20% more than the average requirement of a denizen! Of course there is not much that can be done to make surplus food available to needed population because most of them do not have adequate purchasing power to buy their food needs and after all there is nothing like a charity in the food front that will allow producing countries to distribute foods freely. A country like India which itself is holding huge food stocks found it difficult to use its surplus stocks, some of which has been getting rotten under sub-par storage conditions. The food security "scheme" which is supposed to distribute government food stocks at heavily subsidized prices ( almost free!) seems to have run afoul with WTO regulations for free trade and this global issue still needs to be sorted out. The big question therefore is whether the current situation will exacerbate the food situation further and whether it will impact on the farmer income world over due to market depression of prices. Here is a take on this.

"The monthly Food Price Index of the United Nations' Food and Agricultural Organization (FAO) was at 196.6 points in August, down 7.3 points (3.6 per cent) from the previous month and lowest since September 2010. Barring meat, prices of all 65 agri commodities measured by the index showed marked decline in the month. With the world cereal production forecast scaled up to 2.5 billion tonnes this year - only 0.5 per cent lower than last year's record high - FAO's cereal price index averaged at 182.5 points in August, down 2.8 points (1.5 per cent) from last month and 24.2 points (11.7 per cent) lower than August last year. The global inventories of all cereals are estimated to rise to the highest levels in 15 years, given the good harvests in the past two years. By the close of the 2015 season, the world cereal stocks could reach 616 million tonnes, 12 million tonnes higher than the previous forecast and six per cent more than the start of the 2014-15 season, estimates FAO"

Another aspect of this glut is whether consumer will benefit by increased availability of food grains in the market? This is an unlikely scenario because more than 80% of world food supply is controlled by giant international companies with awesome financial clout. They can manipulate the global prices to deny the benefit of lower prices of grains in the world market through "cartelization" and retail market prices. Ultimately this situation benefits neither the farmer nor the consumer while the bottom line of grain traders gets significant boosts! A pity indeed!   


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