Food prices and food security

Chart 1: Prices of essentials
Source: CEIC Asia database, prices are for Dhaka.

WE will have to … reduce price hike and improve people's living standard," said the prime minister at her first news conference after the landslide election victory. Since then, she and her senior ministers have repeatedly stressed that bringing down the prices of essentials within people's purchasing power is a priority task for the government. This is not surprising given the importance most voters accorded to high prices in the lead up to the election.
The Awami League capitalised on voters' concerns by pointing to its better record on this issue. Prices of essentials -- the proverbial rice, lentil, cooking oil and salt -- either remained virtually unchanged or fell between 1996 and 2001, while all prices rose under its rival (Chart 1). To put the price rises in context, a male farm labourer earned an average daily wage of 48 taka in 1996 (with which he could buy 3.1 kg of rice), 67 taka in 2001 (buying 4.3 kg of rice) and 95 taka in 2006 (buying 3.7 kg of rice).
It is no surprise, then, that the voters have overwhelmingly turned to AL for lower prices. But will AL be able to bring prices down, or at least stem the rate at which prices have been rising? And in the longer term, what does the government need to do to achieve food security -- defined by the Nobel laureate Amartya Sen as access to food products, particularly by poor people.
There are grounds for optimism as far as the near term outlook for agflation -- food price inflation -- is concerned. But drivers of agflation and food security are complex and multifaceted. This piece stresses that for food prices to stabilise, if not fall, and for us to achieve food security over the medium term, a lot more than "cracking down unscrupulous business syndicates" will be needed.
For the full version of this article please read this month's Forum, available free with The Daily Star on Monday, February 2.
Jyoti Rahman is an applied macroeconomist.