ACCORDING to the new World Bank data, in the last seven weeks, international wheat prices have risen by 50 per cent, corn 45 per cent and soybean 30 per cent.

The rise is surprising even for the bank as it surpasses all earlier predictions, at least for this period of the year. The grain market analysts were forecasting a fall in prices as late as early June because fresh crops were due. Instead, they are experiencing a new spike.

At the heart of current price peak lie the weather-related production issues. They hit the US, Russian, the European and Asian regions, changing international projection and calculations within a span of barely 60 days. The pattern of weather has taken every one by surprise; the Europeans are unable to deal with excessive rains and the Russians, Ukrainians, Kazakhs and the South Asians are praying for them, suffering drought condition – out of 600 districts in India, 300 have officially been declared drought-driven calamity hit.

Comparison of the current spike with 2008 hike reveals another dimension. In 2008, all grain prices went up but wheat and rice spiked the most. This time, rice seems to be safe so far. But, with rice crop in big trouble in South Asia (Indian drought and delayed monsoon in Pakistan), its prices may climb up the hill soon. Though this rise may not be as steep as of other grains because of comfortable international stock position, it may still threaten the poor – especially those for whom it is a staple. If a few more rice-producing countries also stumble in the next few weeks or months, it would complete the disaster for grain market.

Of most of the regions and countries facing these weather-related problems, Pakistan falls in the list of the ‘most vulnerable’ for three reasons: it is neither studying nor preparing for the weather phenomenon, nor it has storage capacity to absorb such temporary volatility, nor a system for predicting and preempting impact of such hikes.

The World Bank started such warnings from 2010 that price volatility would rule markets for at least up to 2015. Now it is warning the trend to hold even beyond 2015. These crises are caused by two factors: increasingly erratic weather and behaviour of international market. In this context, Pakistan is ill prepared and helpless.

By June, its weather pundits were promising 15 per cent more rains than its long-term average. By the end of July, the country was in the grip of drought, threatening its rice and cotton crops. Fluctuation of 45 per cent in rains behaviour in a matter of six weeks is something no one can deal with, nor plan anything.

The international players have integrated stocks, energy and food markets – de-linking food from production and dealing only in the Futures. This has multiplied speculative pressure on food price.

This market has become so big that smaller economies like that of Pakistan cannot do any thing about them. It is a place with one trillion-dollar food market while three trillion dollars are put on the Futures. Thus, the only option countries like Pakistan have is to improve their meteorological paraphernalia for more precision in weather studies.

In addition to the World Bank, almost every international body has put Pakistan on the top of the list of those states that face ‘extremely bad food availability and pricing position.’ In the absence of appropriate institutions, Pakistan can neither predict nor pre-empt any food price volatility in domestic market, leave alone international ones.

Everything now depends on the market indicators, when international or domestic prices start rising. Pakistan wakes up to them – making things difficult for it and its people. It is yet to develop an honest system of even basic indexation of food price.

Its current indexation is politically motivated – keeping it down by including non-essential items that are relatively stable in prices.

The policymakers just have to look around to learn how the world is dealing with food price volatility. The most viable solution it found is by building storage capacity for its grains, especially for staple and export crops.

The country is stuck at around 20 per cent storage of its total grain production. It even does not have basic storage facility for its staple – wheat. With the weather turning erratic and all commodities out either under the scorching sun or rains, no wonder the post-harvest and storage losses of the country are one of the highest in the world. They directly translate either into food scarcity or financial loss for farmers or the state.

Pakistan policymakers need to realise that weather and food price volatilities are now part of the human lives. Free trade driven by profit would keep testing markets with greed and weather with unsustainable agriculture that bring short-term profits.

This is a world that Pakistan has to live with. Better prepare rather than regret every six months when weather and food prices misbehave – and push a few more million homo sapiens down the poverty line.—Ahmad Fraz Khan