Rising Prices Bad News for us, Terrible News for the World's Poor
Brandon Sun “Small World” Column, Sunday, June 15 / 08
Canadians and citizens of other rich countries are understandably concerned about the recent sharp rise in the cost of gasoline and groceries.
As the cost of a barrel of oil continues to rise toward an expected $200 (now sitting at about $135 and not long ago below $100) and our cost per litre jumps five cents per week, citizens of the rich world contemplate how to cut back and save. They might trade in the old gas-guzzler for a hybrid, take a briefer vacation this year, or take the bus and leave the car at home when possible. As food prices go up 10% here, we rich consumers consider going out to eat less often or adding a vegetarian option once a week.
Although we may need to make some adjustments, those of us who are well off in the rich world really still have it easy, relative to what people face in the developing world. Through our trade policies and our lifestyles, we generally live well, continue to undermine the natural environment, and consign the poor, which represents a majority of humanity, to their place – last place – in our planet’s economic hierarchy.
Inequalities between rich and poor are widening. Globally, the top 20%, the highest income citizens in our world, account for 86% of total private consumption expenditures, while the bottom 20% consume a minimal 1.3%. The richest fifth consumes 45% of all meat and fish (the poorest fifth only 5%). The richest fifth consumes 58% of total energy (the poorest fifth only 4%). We richest fifth consume 84% of all paper and own 87% of all vehicles (the poorest fifth only 1% of each).
The United Nations estimates that it would take an additional $40 billion to what is currently being invested to achieve universal access to basic social services in all developing countries – basic education, water and sanitation, reproductive health, and general health and nutrition. This figure is really very small when compared to how the rich world spends its money. Annually, the US spends $8 billion on cosmetics and Europeans spend $11 billion on ice cream. Pet food sales in the US and Europe totals $17 billion annually, and cigarette sales in Europe stand at $50 billion.
While food prices have gone up 10% in the rich world in recent months, poor countries are facing increases on average of 40%.
Food riots have broken out in many countries, including in Haiti, Indonesia, the Philippines and Egypt.
Families are having to cut back from three to two, or even from two to one, meal per day, and are cutting meat out altogether. The switchover of land to growing biofuels rather than food is one cause of the current world food crisis. Other causes include the effects of climate change, causing storms or drought in different areas, and prohibitive trade barriers that stifle developing world exports and economies.
The UN estimates that at least 100 million new people are currently in food crisis mode. Its Secretary-General, Ban Ki-moon, speaking at a world food summit recently, said that he has witnessed people in Liberia buying rice by the cup whereas they would normally buy it by the bag.
His predecessor, Kofi Annan, is now heading up the Alliance for a Green Revolution in Africa (AGRA) that will, in partnership with the US government foreign assistance agency Millennium Challenge Corporation, try to boost African agriculture as a way to deal with food shortages and prices.
Annan has called for a “green revolution” through major investment and programming: in his continent’s infrastructure (Annan says that 40% of African crops are lost after harvest. New roads could ease this problem.), new water technologies for efficient and effective irrigation, financing (as African small holders lack capital), and the development of new seeds and fertilizers. This major continental project will focus on three countries: Ghana, Madagascar and Mali.
The challenge will be for this green revolution to bring better results than previous ones. The first one, in the 1960s, brought improved livelihoods largely to better off farmers while leading to the dispossession of poor landholders, and introduced chemicals and technologies that hurt the environment and were accessible only to those already well off. As well, the US connection will focus on development that promotes Western-style governance and economic models, opening it up to criticism by those who want development, but not the political control and economic biases.
For the rich, the oil and food crises raise the question of how we can live more efficiently.
For the poor of the world, the question is how will they be able to live at all? The scale of the crisis is so very different for us and for them.
We need to open ourselves up to change in our lifestyle, in our ways of being generous, and in our trade and other economic policies. While we should demand honest government and human rights guarantees from developing nations, we also need to challenge ourselves to live within the means that the world affords us and to narrow the gap between rich and poor.
Zack Gross is program coordinator at the Manitoba Council for International Co-operation (MCIC), a coalition of 38 international development organizations active in our province.
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