Global food situation

RISING food prices are becoming a big pain for the policy makers of the importing countries all over the world. In Chicago, wheat and rice prices for delivery in March, 2008 have jumped to an all-time record, soyabean prices are at a 34-year high and corn prices at an 11-year peak.The rise in prices is so fast that the new benchmark price of wheat for March delivery has gone up to $9.795 a bushel, more than four percent higher than the expiring December contracts of $9.39. Benchmark prices of other food grains and edible oils have also jumped by almost the same margin. Overall supplies this season were much lower than expected as several countries suffered weather-related losses and emerging economies, where rising incomes are boosting consumption, are making greater demands on the depleted stocks. The US Department of Agriculture has predicted that global corn stocks will fall to a 33-year low of just 7.5 weeks of consumption, while wheat stocks will plunge to their lowest level in at least 47 years at 9.3 weeks. Surging cereal prices have already hit the wholesale market and contributed to rising inflation. For instance, the increase of Euro zone food price inflation to 4.3 percent in November was one of the main reasons for the jump in the zone’s annual inflation rate from 2.6 percent in October to 3.1 percent in the subsequent month, the highest in six years. In the US, annual food price inflation of 4.8 percent in November contributed to a rise in the inflation rate to 4.3 percent. Obviously, it is but inevitable that rising food inflation will again hit the world’s leading economies in the near future. Jean Bourlot, head of agriculture commodities at Morgan Stanley is so pessimistic that he thinks that “high cereals prices are here to stay”. The resulting inflationary pressures, to state the obvious, would not only hit the consumers but constrain the ability of central banks to mitigate the slow-down in their economies.
The governments of importing countries are finding it politically inevitable to reduce local food prices and attempt several measures in this regard. Import tariffs for major agricultural commodities are being slashed to cushion the local markets against rising food inflation. The European Union - the world’s top importer of wheat and one of the largest buyers of soybean and corn - has announced that it will set zero import duties for cereals until next June. This follows cuts in countries such as China, Russia, Mexico, Morocco, Azerbaijan, Bosnia, Egypt, Philippines, Taiwan, Bangladesh, India, Nigeria, Ghana and Peru. Turkey was the latest country to announce a reduction in custom duties, having cut its import tariff for wheat from 130 percent to eight percent, for corn from 130 percent to 35 percent and scrapped the previous 100 percent duty for barley. Some of the exporting countries have prescribed high export tariffs to keep the domestic markets well supplied. As the world markets are now integrated, Pakistan is also suffering the consequences of global food shortages, compounded further by a lacklustre domestic production of major food crops. Driven by a jump of 12.45 percent in the sub-index of “Food and Beverages”, the Consumer Price Index (CPI) during November, 2007 was up by 8.67 percent compared with a year ago. All other sub-indices recorded changes between 3.13 and 8.77 percent which were much lower than the rise in the food index. Knock-on price rises are set to hit consumers in the coming months. One indicator of such a phenomenon is a steep increase of 15.25 percent in the sub-index of “Food” in the Wholesale Price Index (WPI) which is generally a precursor of the further trend in prices.

Lessons from the OECD tests

JAPANESE first-year high school students who took part in a 2006 international survey by the Organization for Economic Cooperation and Development scored lower in every field than the Japanese students who took the tests in 2003. The survey focuses on children’s ability to solve problems in adult life by using their knowledge and skills as well as their interest in science. The education ministry, educators and parents should feel a sense of crisis over what the test results suggest for Japan’s future and take necessary measures. The OECD Program for International Student Assessment covered about 400,000 15-year-olds in 57 countries and regions, testing their abilities in three fields — reading comprehension, mathematical skills and scientific literacy. About 6,000 Japanese students took part. The OECD, a club of 30 industrialized nations, arranges the tests so that the average score is 500 points. Japan fell from 14th (498 points) to 15th (same number of points) in reading comprehension, from sixth (534 points) to 10th (523 points) in mathematical skills and from second (548 points) to sixth (531 points) in scientific literacy. The education ministry insists that Japan’s scores as a whole are around or above the OECD average. But the PISA results cast doubt on Japanese children’s ability to understand what is taught in school and make use of this knowledge later. In the first PISA, carried out in 2000, Japan ranked first in mathematical skills and second in scientific literacy, while ranking only eighth in reading comprehension — a test that gauges students’ ability to strive to find an answer. Japanese children ranked last in the length of time they devote to studies at their own initiative and the percentage of children who read books. In 2000, the seeds of today’s problems were already planted. South Korea, Hong Kong and Taiwan did well in the PISA for 2006. In mathematical skills, Taiwan, a newcomer to the test, came in first with 549 points and South Korea and Hong Kong tied for third at 547 points. In reading comprehension, South Korea placed first with 556 points while Hong Kong came in third at 536. In scientific literacy, Hong Kong placed second at 542 and Taiwan took fourth at 532.
The 2006 PISA results show that Japan has failed to nurture children’s ability to “detect problems, learn and think by themselves, judge and act autonomously, and solve problems in a better way.” These goals are embodied in the courses of study enforced since 2002. The courses are the foundation of “more relaxed” education, whose main pillars are fewer class hours and an emphasis on meeting the individual needs of students. The Central Education Council, which advises the education minister, thinks that an increase in the number of class hours will enhance children’s scholastic ability. It has decided to increase class hours for core subjects in elementary and middle schools by about 10 percent. The core subjects are Japanese language, mathematics, science, social studies, physical education and, at middle school, English. But the council first should seriously reflect on why Japan has failed to achieve the goals embodied in the courses of study. The council attaches importance to learning by rote, but it is clear that students will have difficulty solving questions in the PISA tests by just relying on the knowledge acquired through such learning.

—Japan Times