The World Food Programme (WFP) chief, Josette Sheeran highlighted last week the critical situation caused by decline in food stocks and surge in prices that has hit the world’s hungry. The agency last month issued an emergency appeal for money to cover a shortfall of more than half a billion dollars in its aid programme.

What has happened in recent months and years is that in an “unforeseen and unprecedented” shift, according to the FAO chief, the world food supply has begun shrinking rapidly and food prices are soaring to historic levels, rendering millions vulnerable, insecure and doomed. So, fewer people will be able to get food, particularly in the developing world, in the year ahead as compared to last year.

And Pakistan, too, is unlikely to escape the impact of “the perfect storm.” A World Food Programme survey revealed last week nearly half of Pakistan’s population may be badly battered by this “storm.” The number of people believed to be ‘food insecure’ has risen to 77 million from 60 million in the previous year.

This can be attributed to critical flaws in the state’s agricultural policies and rent-seeking behaviour of the personnel managing the entire exercise from production to distribution. Another reason, the survey cites is the growing gap between increase in prices and increase in wages which stands at 35:18 ratio. This factor has reduced the purchasing power of the poor by almost 50 per cent. The World Bank has recently warned Pakistan of an impending economic crisis if it fails to make rapid reforms in its agriculture sector to overcome the approaching food shortages which the world has already started experiencing.

Globally, food inflation is forecast to increase by an average of 7.5 per cent during the next five years, well above the 2.3 per cent average in the last ten years. According to the FAO, the price of wheat is more than 80 per cent higher now than a year ago, and corn prices are up by a quarter. Global cereal stocks have fallen to their lowest level since 1982. And, as expected, the brunt is falling heavily on the poor. About 40 nations have been judged to be at risk of serious hunger, or already suffering from it.

Jacques Diouf, the FAO chief, is of the view that all countries and international agencies would have to “revisit” agricultural and aid policies which they adopted earlier in a different economic environment. For example, with food and oil prices approaching records, it may not make much sense to send food aid to poorer countries, for what is needed is to help farmers grow more food and also locally. The FAO plans to start a new initiative that will offer farmers in poor countries vouchers that can be redeemed for seeds and fertiliser and will try to help them adapt to climate change. Among the developing countries, China and India “carve out a bigger place at the table; and a new dinner guest—biofuels—threatens to become the biggest glutton of all,” according to a western analyst. The two emerging powers have the largest populations to feed and hence enormous food to grow to meet the needs. In recent years, there has been a big rise in the number of meat-eaters in the two countries which requires additional stock of food grains. In turn, it makes the population of the absolute poor more insecure there.

One reason for the worldwide price shock is the rich world’s subsidised appetite for biofuels. Ethanol, the most popular of biofuels, is creating a new competition over land: should it be used to grow fuel for cars or food for humans? The booming ethanol industry in the US diverted 81 million tonnes of grain towards biofuel in 2007.

The European Union last month said it might reconsider its strategy on use of biofuels –– ten per cent by 2020 –– over concerns that the bloc’s approach was pushing up food prices. Although some observers blame the weather or biofuels for the decrease in crop yields, to many it is simply a matter of demand outpacing supply. In seven of the last eight years, world grain production has fallen behind rates of consumption.

There occurred food riots in Pakistan, and also in Indonesia and Egypt, a few months ago and there are predictions of similar unrest in the months ahead as the new crop is likely to be inadequate. The recent spell of heavy rains and hailstorm has already damaged the wheat crop in parts of southern Punjab and Sindh where it is ready for harvest. The crop is expected to be around 20 million tonnes against the target of 24 million tonnes. But the rains in April are likely to have a better impact on the next crop. Pakistan consumes about 22 million tonnes a year.

Research shows that the poor farmers in Pakistan, the main producers, pay a higher price on their inputs and get a lower price on their outputs compared to the large farmers. Consequently the poor peasants are losing as much as one third of their income due to this anomaly. Then, the distribution of land ownership is highly unequal and there is widespread tenancy. The poor tenant, thus, suffers insecurity of tenure and loses much of his income to the landlord. As a result, he has neither the incentive nor the ability to increase productivity. So, many of them prefer to abandon farming and move to urban centres where they can at least sell their labour at reasonable rate to survive. Last week, food prices suffered one of the highest increase in the current fiscal as they soared by 19.83 per cent. The consumer price index, a key indicator of inflation, rose 11.25 per cent in February from a year ago, mainly due to food prices. Because of the previous government’s reluctance to reduce subsidies for food and fuel, the new government is confronted with a widening fiscal deficit. While wanting to minimise the poor man’s hardship, it will face some difficult choices.

According to second quarterly report of the State Bank of Pakistan, there are little prospects of achieving the agriculture growth target of 4.8 per cent during the current fiscal year. The bank thinks there was an urgent need for reforms to put agriculture back on the rails. The data about 2008 Rabi crops indicates that area under wheat cultivation has decreased by 0.2 per cent.