DINDEX/538-Food Security and Stability in South Asia

Session 29: Controlling Food Prices in Turbulent Times: An Agenda for South Asia

Report on WTO Forum Session organized by Academy of Business Studies and World Trade Centre, Mumbai on 20 September 2011 at WTO Geneva

The recurring theme in this session was food security and stability in South Asia. The session focused specifically on unregulated speculation on agricultural commodities, surplus production in India and the increasing amount of trade barriers such as tariffs and bans in the world market.

The moderator of the session, Arun Goyal, Director of Academy of Business Studies, New Delhi, opened the session by describing the current situation in South Asia. He said that South Asia used to be a region which had the poorest and the hungriest number of people; however, this has changed and South Asia now has a surplus in wheat and rice.

The first speaker, Petko Draganov (Deputy Secretary-General of UNCTAD) emphasized that food security is central to UN efforts. He drew the attention of the audience to data by the World Bank stating that 190 million people in the world were pushed into hunger after the 2008 Food Crisis. He also stressed the fact that the Horn of Africa is currently experiencing its worst famine since the 1980s. He, like other panellists, expressed concerns that the extreme volatility in food prices was deterring producers from making the necessary investments in agriculture, which in turn explains the growing food insecurity. He noted that UNCTAD was proposing a series of measures to prevent price volatility, for example creating adequately resourced safety nets, creating rules for markets to prevent manipulations and price abuse, and investing in more resilient modes of agriculture against climate change and to stimulate agricultural innovation.

Lauren R. Landis gave a brief overview of what the World Food Program (WFP) is doing in building food security in South Asia. Echoing the opening remarks of Mr Goyal, she submitted that South Asia has a very big role to play in matters of food security since it is where the hungriest people are and where the food surplus is. She stressed that the most important element to the WFP is stability of the market and that volatile food prices affect the way the WFP operates. To substantiate her claim, she gave the example of Afghanistan, whereby price increases of food (because of high volatility) drastically decreased the number of people the WFP were able to feed from 7 million to 3.8 million, using the same budget. She ended her presentation by claiming that export restrictions, despite being regulated by the WTO, have in the past decreased the number of lives that can be saved.

From an economist point of view, Sadiq Ahmed of the World Bank gave an overview of what South Asia can do to prevent the increase in food prices. The essence of his submission was based on the notion that South Asian countries have very limited fiscal policy space and as such, their subsidy programmes are becoming unsustainable. He also argued that increasing productivity is the only way of preventing an increase in food prices due to the fact that prices of energy, water and fertilizers are increasing. He also noted that the average level of trade barriers in agricultural goods is very high.

From a business perspective, Vijay G. Kalantri expressed his discontent with the fact that developing countries do not have the level playing field in world trade since they are asked to remove trade barriers for their imports while their exporters are faced with several trade barriers. To support his argument, he cited the case of Indian grapes export to Europe, whereby the whole shipment was refused entry even though only one container had some pests, totally at the expense of Indian exporters. He also mentioned that grants advocated during the early days of the WTO for capacity building were never given out. He emphasized that governments should start regulating markets for commodities and speculation in “market-immature” developing countries like India should have a complete ban on speculation on agricultural products. He ended his presentation by urging the world to help India in building the necessary infrastructure for the betterment of the agricultural industry.