The global price hike

When the cost of something becomes far more expensive than its original price is known as price hike. The world has just experienced the recession and the affected countries are trying to recover it but the recent global price hike is making their path difficult. According to World Bank Rising food prices have driven an estimated 44 million people into poverty in developing countries since last June as food costs continue to rise to near 2008 levels. Global food prices are rising to dangerous levels and threaten tens of millions of poor people around the world, said World Bank Group President Robert B. Zoellick. The price hike is already pushing millions of people into poverty, and putting stress on the most vulnerable, which spends more than half of their income on food. According to the latest edition of Food Price Watch, the World Banks food price index rose by 15 percent between October 2010 and January 2011, is 29 percent above its level a year earlier, and is only 3 percent below its 2008 peak

The main food grain

1. wheat prices have risen the most, doubling between June 2010 and January 2011 2. corn prices are about 73 percent higher 3. rice prices have increased at a slower rate than other grains 4. Sugar prices rising gradually 5. edible oils prices increasing rapidly 6. beans in some African countries has been doubled

Consumer price index

Due to the increase of food price there is a negative impact on the Consumer price index .

Reasons behind the crisis

1. Less production of food grain around the world due to global warming 2. the production cost has been doubled due to - increasing price of energy sector ( petroleum, electricity) - Irrigation cost has been doubled as water is insufficient in many part of the world. 3. food export restrictions 4. inflation 5. Increasing transportation cost (Shipping products cost more because of the sky rocking prices in fuel and that is what is jacking up the prices of food.)

How the World Bank is helping

The World Banks Global Food Crisis Response Program (GFRP) is helping some 40 million people in need through $1.5 billion in support. To date, over 40 low income countries are receiving or will receive assistance through new and improved seeds, irrigation, and other farm support and food assistance for the most vulnerable people. For example, in Benin, fertilizer provided through these resources led to the production of an extra 100,000 tons of cereal. For the longer-term, the World Bank Group is boosting its spending on agriculture to some $6-8 billion a year from $4.1 billion in 2008.

In addition, they are supporting:

1. The new Global Agriculture and Food Security Program (GAFSP), set up by the World Bank in April 2010 at the request of the G20 to support country-led agriculture and food security plans and help promote investments in smallholder farmers. To date, six countries and the Bill & Melinda Gates Foundation have pledged about US$925 million to the program over the next three years, with $350 million received so far. Since its launch, GAFSP has approved and started disbursing grants worth $321 million to 8 countries - Bangladesh, Ethiopia, Haiti, Mongolia, Niger, Rwanda, Sierra Leone and Togo. 2. Advocacy for more investment in agricultural research, and for its improved effectiveness - including through the Consultative Group on International Agricultural Research. 3. Monitoring agricultural trade to identify potential food shortages. 4. Coordinating with UN agencies through the High-Level Task Force on the Global Food Security Crisis and with Non-Governmental Organizations. 5. IFC has significantly scaled up its investments in the sector, providing nearly $2 billion in fiscal 2010 along the agribusiness supply chain to boost agricultural production, increase liquidity in supply chains, improve logistics and distribution, and increase access to credit for small farmers.

Global price hike and its impact on Bangladesh

The commodity price including that of food grain has become very volatile in the international markets due to various reasons such as global warming and speculators active in the commodity exchange. It is difficult for country like Bangladesh with very limited resources to play effectively in that volatile commodity exchange. As the production of our country is still very low we have to face some serious problem due to global price hike. The impacts are 1. Government has to take loan for purchasing food from the world market as the local market cant provide so. 2. Government is facing loss as its continuing OMS program 3. Government now purchases local rice for TK 27 a kg. But it has to pay TK 38 for one kg of rice on the international market. Rising rice prices on the global market will push up the average purchase cost. 4. More people may be driven into poverty 5. The inflation has already increased 6. People are gradually losing purchasing power.

7. There is an increase in CPI

Governments project to meet the crisis

1. The government will increase subsidy for food grains and agricultural inputs by 38 per cent in the current fiscal year to check price hike of food grains 2. The subsidy is expected to go up to Tk 7,025 crore from the present outlay of Tk 5,088 crore, said officials in the food and agriculture ministries. 3. The government lowered prices of non-urea fertilizers several times to benefit farmers, and help them maintain a balance in the use of fertilizers and get a better output. 4. The government has moved to enforce anti-hoarding laws to discipline dishonest rice traders and millers 5. The government had initially allocated TK 4,000 crore as subsidy for agri inputs in the current fiscal year. But a rise in fertilizer prices fuelled by oil price hike on the international market made it necessary to add TK 1,800 crore to the amount . 6. Government is trying to have a bumper Boro production. If we have a bumper production, global market prices will not affect our domestic market.