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Thursday, October 7, 2010

Possible government intervention in food markets

News from FAO gives a warning towards a possible commodity supply and price shock at the global market. Though FAO declines the idea of another episode of global food crisis like the one in 2008, however it puts a concern about the possible food insecurity in some countries, especially a large number from African region.

Bangladesh is not out of danger too! In fact, for the last couple of months, main food (staple) prices has been soaring alarmingly at the domestic markets coinciding with global markets, overshooting the previous records. For example, according to the Trading Corporation of Bangladesh (TCB), during the last one year, rice prices rose by 44%, flour prices by 52%,  soyabean oil prices by 18% and palm oil prices  by 35%.

There is clear information that food stocks of the government are not satisfactory, even not up to the level of the previous year. In particular, the government has roughly half of the food stock that it had last year! Country experts are blaming government’s lack effort to reach its initial target. Though now the government is trying to import from neighboring countries to increase its food stocks, the speed of efforts is slow.

The suggestions are straightforward. The government needs to stock enough food until Aman and winter commodities come in the market. This will play a dual purpose. One, if there is any crisis in food prices, the government can supply those stocks in the open market to the poor for cooling down the market price. Second, if there is any natural (or artificial) food crisis, the government can supply foods from its stocks. 

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