A
few days ago the UN warned that food prices could rise by 10% to 20% next year
after poor harvests and an expected rundown of global reserves. More than 70
African and Asian countries will be the worst hit, said the Food and
Agricultural Organization in its monthly report.
In
its gloomiest forecast since the 2007/08 food crisis, which saw food riots in
more than 25 countries and 100 million extra hungry people, the report's
authors urged states to prepare for hardship.
"Countries must remain vigilant against supply shocks,"
the report warned. "Consumers
may have little choice but to pay higher prices for their food. The size of
next year's harvest becomes increasingly critical. For stocks to be replenished
and prices to return to more normal levels, large production expansions are
needed in 2011."
Furthermore
the UN warned that international food import bills could pass the $1 trillion
mark, with prices in most commodities up sharply from 2009. Global food
reserves, which currently stand at around 74 days, are now expected to decrease
significantly in the next few months.
"Cereal reserves may drop by around 7%, barley nearly 35%, maize 12% and
wheat 10%. Only rice reserves are expected to increase, by 6% next year," said
the report.
Much
now hangs on next year's harvests, it said.
"International prices could rise even more if production next year does
not increase significantly - especially in maize, soybean and wheat. Even the
price of rice, the supply of which is more adequate than other cereals, may be
affected if prices of other major food crops continue climbing."
Whilst
it is apparent that some of the food price hikes are due to a fall in
production-Russia's ban on wheat exports in the aftermath of the fires- the UN
has again overlooked the main culprit, food speculation and the declining value
of the dollar. Both are playing havoc with food prices worldwide.
The
debasement of the dollar reduces the purchasing power of the currency to buy
goods and services. As most of the world's staple foods are traded in dollars,
the country purchasing staple foods has to pay more in order to secure the same
amount of food supplies to feeds its hungry population. Often poorer countries
do not have extra dollars to meet the rise in food prices.
Hence
some nations are forced to borrow dollars at high interest rates, which in turn
makes them further indebted to the donor nations. Other countries are forced to
make structural changes to their agricultural policies and grow cash crops
instead of staple foods. Thus poorer countries find themselves engulfed in a vicious
cycle i.e. they borrow more to pay off debtor nations and at the same time
deprive their people of food. Still there are some poorer countries, which have
abundance of staple foods, but are forced to sell their crops to earn foreign
exchange to pay off debt owed to first world nations.
What
makes the food equation even worse between the ‘haves and the have not’s is
rampant speculation by the haves. Speculation usually translates into huge food
price spikes, especially when the value of the dollar plunges. This is exactly
what happened a few years ago. And now after the recent announcement by the US
Federal Reserve to spend an extra $600 billion to stimulate the US economy,
speculation on the price of essential food commodities has increased and will continue
do so for a considerable time to come. The net effect is that food prices will
increase sharply and thereby deprive millions around the world of a basic
right.
The
Muslim world will be adversely impacted by rising food prices and this will
leaves millions of Muslims deprived of food and vulnerable to the harsh
economic conditions imposed by the West. The only way for the Muslim ummah to
protect herself from ever increasing food prices is to work for the
re-establishment of the Caliphate. The Caliphate will protect its currency by
basing it on the bimetallic standard.
Hence
food prices will stabilize and will not undergo extreme fluctuations as
witnessed today. Moreover, the Caliphate will prohibit food speculation,
hoarding and price fixing, thereby ensuring that all citizens of the state are
able to afford food. For those unfortunate citizens, who are unable to fend for
themselves, the Caliphate will buy foodstuffs from the open market and tend to
their needs.
The
Messenger of Allah (saw) said: "The Son
of Adam has no better right than that he would have a house wherein he may
live, a piece of clothing whereby he may hide his nakedness and a piece of
bread and some water." [Tirmidhi]
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