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Plans for food security index

July 13, 2012


ISLAMABAD, July 13: The government is expected to establish a food security index (FSI) for closer monitoring of indicators having impact on food security because of a correlation between high food prices and rise in poverty.

An official of the planning commission said the current system of weekly or monthly monitoring of prices of essential commodities through sensitive, wholesale and consumer price indicators could not capture the trend leading to shortage or surplus of food items and resultant prices of the items.

The Sensitive Price Indicator (SPI), Wholesale Price Index (WPI) and Consumer Price Index (CPI) normally depict the price situation on the ground, but most of the time when products and commodities are already sold.

He said the FSI would be a futuristic index which could guide the policymakers to take steps to protect people from volatile food supplies and prices.

The FSI has been conceived on the advice of a defunct task force on food security led by former finance minister Sartaj Aziz.

A task force had been formed by former prime minister Yousuf Raza Gilani in the first year of PPP government but its recommendations gathered dust in the planning commission for more than three years. Now these recommendations are being considered at the fag end of the government’s five-year tenure.

The official said the key finding of the report required an average agricultural growth rate of at least four per cent a year until 2020 (from the existing rate of two to three per cent) to ensure adequate supply of food and evolve an equitable system of grain procurement, storage and distribution so that food products and commodities were available at affordable prices.

Officials said the food security index would be established by the Agriculture Policy Institute of the Ministry of Food Security and research that would also be responsible for updating the index on a regular basis and submit biannual reports to the Economic Coordination Committee (ECC) so that pre-emptive and forward-looking policies could be put in place ahead of major food challenges.

The task force had noted that the terms of trade of agriculture, defined as a ratio of output prices to input prices, constitute one of the most important elements for determining profitability of the agriculture sector and influencing supply responses.

Generally, favourable terms of trade during the 1990s contributed to the buoyancy of the sector and improved food security while the last decade, specifically between 2000 and 2007, saw a worsening of the terms of trade and a corresponding slowdown in the rate of agriculture growth form 4.6 per cent in the 1990s to less than three per cent.

Agricultural credit formed about 21 per cent of the GDP but received only four per cent of total institutional credit which needed to be increased gradually.

The task force advised bridging the yield gap and diversifying the agriculture sector towards high value crops (horticulture, oil seeds and pulses etc) as accelerated growth could stimulate economic recovery and provide a basis for faster growth, once the global recession ends.

Some of these crops would also need improved post-harvest handling like refrigerated transportation, storage and marketing through cool chains in the public-private partnership.