Cross Talk
Back against the wall
WE eat to live, not live to eat. Try telling these lofty words to my man the court clerk and he will give a piece of his mind. With the price of rice hovering around Tk 40 per kilo, and the average price of the same amount of vegetable wobbling at Tk 20, while the prices of other essentials are keeping pace with these hikes, this man is now in a double whammy. His income has diminished since the anti-corruption drive forced him to stop charging his "facilitation fees." On the other hand, the rising prices are eating up his purchasing power within the existing income. At this rate, all his money will be spent on food. He will be lucky if he lives only to eat.
If the prices of essential commodities are compared to a horse, then this horse is surely galloping. Is it galloping only in Bangladesh, though? Early this year, 75,000 trade unionists, agricultural workers and others joined in the biggest demonstration through Mexico City. They demonstrated against the rapid rise in the cost of tortillas.
In August, hundreds of shepherds clashed with police in Jordan to protest against an increase in the price of animal feed. Recently, rise in food prices also led to protests and demonstrations in Yemen and many countries in Africa.
The fact remains that prices have gone up everywhere in the world. In the last half of 2006, food prices rose faster than any other commodity group's after housing. In Britain, the price of a loaf of bread has risen by 15 percent in just 12 months. According to the research company TNS Worldpanel, in the 12 months to June of this year, the supermarket price of milk has gone up 11 percent, eggs have gone up almost 18 percent, butter has gone up 5 percent and meat 6 percent.
If you turn to the UAE market, where the house rents have more than doubled in some areas in last two years, the price of a cylinder of gas has increased by 20 percent, laundry cost by 15-20 percent, and cleaning and other services by 20-25 percent. Needless to say, the food prices haven't remained quite the same.
Let us face it, price hike is now a global phenomenon, which has been happening consistently over the last year across a wide range of commodities, including rice, wheat, soybean, palm oil and dried milk to name but a few. Average wheat prices have almost doubled in a year, causing misery for many across the world who rely on wheat as a cheap source of food.
For half a century, household expenditure on food was falling as a proportion of total expenditure. Much of the disposable income was spent on other things, creature comforts and modern amenities, provided by advances in science and technology. Herbert Marcuse, in his book One Dimensional Man decried consumerism, which incessantly pushed luxuries to become necessities. Now it seems the tide has turned. Necessities are becoming luxuries again.
Why are the food prices rising? The answer is readily ascribed to two reasons. First, more and more land is being taken out of food cultivation and being given to industrial production. John Vidal reported in the Guardian that some 1.4 billion acres of land in India, Brazil, Southern Africa, Indonesia and Malaysia is proposed for turning over to crops for the bio-fuel industry. One of the outcomes is that the world's wheat stockpiles are forecast to drop to their lowest levels in 30 years.
The second factor leading to rising food prices is the big business control over the food industry. They have ensured that rising food prices aid their profitability. In the case of Wal-Mart, the world's biggest retailer, turnover increased 12 percent last year while Britain's biggest food retailer Tesco saw its turnover increase 19 percent.
It may sound like a socialist rant, but while the poorest countries in the world have the highest proportion of national output going to agricultural exports, it is countries in the developed world which export the most agricultural products by value. So the price rises are not benefiting the poor farmers in the developing world. The manufacturers and retailers in the developed world are making another killing.
Somehow, the poor must always bear the brunt of big business ambition. Jody Clarke of the Free Money Morning has come up with what she calls the skyscraper index of stagflation. In 1929, the Chrysler building in New York was followed by the great depression. When the Sears Tower was completed in 1973, it brought in a decade of stagflation. The East Asian financial crisis happened after the Petronas Towers were completed in 1997.
The correlation between soaring buildings and sliding economy is common sense. Both come at the top of a boom. In 2009, the tallest tower will be completed in Dubai. At 630 metres, Burj Dubai will dwarf all other skyscrapers in the world. With the price of crude exceeding $100 per barrel, Dubai and other oil-exporting economies are awash with cash. There is a strong speculation that a slowdown in these economies is only a matter of time.
The third reason for rising food prices is attributed to costly oil. Transportation and motorised tilling and harvesting have factored into the cost of food production. When eating becomes costly living follows suit, and makes eating costlier within that vicious cycle. My man the court clerk doesn't know much of it. He feels what he does, his back against the wall. Little does he know that what squeezes him comes after endless maneuverings between need of so many and greed of so few!
That being the background, what lies ahead? Rising food prices lead to subsistence crisis. And, some of history's pronounced revolutions are culminations of this crisis. When the back is against the wall, one of two things must happen. Either the wall crushes the back or the back crushes the wall. Then desperate people take the law in their hands.
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