Food price hike pushed 40 lakh into poverty

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The recent food price hikes following natural disasters in the country and the volatility in international food market might have pushed over forty lakh people into poverty, said a World Bank (WB) projection yesterday.

“Over four million people in the country may have been pushed back in poverty because of the food crisis,” said WB Lead Economist Vinaya Swaroop at a discussion with journalists on impacts of food crisis in Bangladesh in the bank’s office in the capital.

In his presentation on ‘Bangladesh: The Economics of Food Crisis’, he said WB’s recent poverty report on Bangladesh suggests that the stronger GDP growth between 2005 and 2008 was expected to reduce poverty by around 5 percentage points.

“However, the food price shock is projected to have raised poverty rate by around 3 percentage points from the baseline poverty rate of 2005. Thus, the net impact on poverty of the combined effects of economic growth and the food price shock is likely to have been a decline of 2 percentage points — from 40 percent in 2005 to 38 percent in 2008,” Vinaya said in his presentation.

Coarse rice price in the recent past was Tk 36 a kilogram (kg), which also continues to stay as high as Tk 32 a kg now, despite no shortage in its supply, he noted.

WB Country Director Xian Zhu said the poor get most of their calories from rice, which accounts for as much as a quarter of the total household budget of an average Bangladeshi household, while a poor household spends nearly one-third.

“A 60 percent increase in the price of rice alone, as has happened in the last 12 months, erodes nearly one-fifth of the income of a poor household. Increases in prices of other key food items compounded this loss in real income of the poor,” he said.

Xian Zhu said the immediate near-term priority should be to ensure food security for the poor and vulnerable, while he lauded the government’s expansion of open market sales, introduction of 100-day Employment Guarantee scheme, and augmentation of public food stocks.

“But, for a longer term,” he said, “Increasing productivity is the only option in a country like Bangladesh where every year over 2 million people are added to the population, while the availability of cultivable land is decreasing by one percent.”

The good news is that raising yields has a huge potential in Bangladesh, he said adding that productivity can be increased by 30 to 60 percent by using hybrid seeds, by rationalising input utilisation, and by improving other crop management practices.

Asked about WB’s opinion about whether Bangladesh should opt for being self-sufficient or for being self reliant in food, Vinaya said no country can be self-sufficient in everything.

“You don’t produce oil. So, you have to import it from the international market. It is an economic decision whether you can import it at a cheaper cost or you want to produce everything.”

He said the bank always believes in trade. “It has been proven that free trade is beneficial to everyone. The reason behind this…we all find useful things in it. Think about RMG… you are exporting huge amounts.”

Xian Zhu said, “Whether you rely on your domestic food or trade, depends on cost that needs to be critically analyzed. Then the government on behalf of the people should make a decision.”

Asked on ways to tackle price hikes of agricultural inputs, he said efficiency in using them should be increased. “You have to see how you can get the best yield by using the least of fertilizer or irrigation.”

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