US slashes estimate for world corn stocks
US officials cut hopes for the domestic corn harvest, and make huge revisions to Chinese data, heightening concerns over world supplies
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Increasing food prices caused by Local, not global, market forces
LONDON, United Kingdom (IRIN) – Banu Bibi’s shopping basket is becoming emptier. When she goes shopping in Dhaka, Bangladesh, she spends more than a year ago, but that money buys less. In 2010, for 134 taka (US$1.80), she could afford lentils and laundry soap, and the family’s favourite fish. This year she has to spend 185 taka ($2.50) just for the basics: more rice to make up for the lack of other food, and cheaper vegetables.
Banu Bibi lives in one of eight communities picked by a research team from the Institute of Development Studies in the UK to track the effects of rising food and fuel prices. For three years, with the help of partner organizations in Bangladesh, Indonesia, Zambia and Kenya, they have been talking to people in selected rural and urban communities about how rising prices affect their lives.
Banu Bibi’s experience is fairly typical. Her family is not starving; they still have food, but it is not the food they like and is not as nutritious as it could be. They certainly ate more and ate better before the food price shock and financial crisis of 2008. And across the world, homemakers are having to work harder, spending more time shopping or looking for food, and planning more carefully to stretch their budgets to feed their families.
A woman in Lango Baya, Kenya, spoke for many when she told the researchers: “You go to a shop to buy something with the same amount as you paid the previous day, only to be told that prices have risen.”
Although food and fuel prices did fall after the initial spike in 2008, they never went back to their previous levels, and this year they have jumped again. Only one of the four countries studied has experienced some respite this year – Zambia, where the price of maize, the staple food, has not increased.
Local locus
While the two previous studies concentrated on the mechanisms people used to cope with the rising prices, this time the researchers decided to ask some more political questions – why did people think prices were so high? Who was to blame? And what should be done about it?
“It was an interesting time, with the Arab Spring and unrest around the world, and we wanted to ask how people felt about the food and fuel price rises,” the research team leader, Naomi Hossain, told an audience at the University of Sussex, recently.
Her presentation coincided with the publication of a report into the global causes of rising prices by the British charity, Christian Aid. It analyzed recent movements on commodity markets, and concluded that much-vilified hedge funds were not the real culprits, instead singling out pension funds. They have very large pots of money, and have been pulling out of volatile stocks and shares and investing in funds linked to a basket of commodity prices, forcing fund managers to protect their positions by buying commodity futures on such a scale that they move the market.
But although commodity price rises are now an international phenomenon, extensively reported in the media, the people Hossain and her colleagues spoke to only looked for causes within their own country, citing hoarding and speculation, changing climate and environmental problems in their own area, and – overwhelmingly – their governments’ failure to care about the poor.
One interviewee in Bangladesh told them, “I don’t believe in this global market story at all. It is just an excuse for the government not to do anything.”
Hossain describes “a real failure of global civil society to get people to see how their livelihoods are connected to the global economy. I am not surprised people prefer local causes. It gives people a sense of agency; if it’s a global problem, then what can they do?”
Moral focus
But she has a certain sympathy for governments. There are more social protection schemes in place, for instance, than at the time of the first survey, despite governments having their budgets squeezed, but even so they get little credit.
Those who believe the government should “do something”, suggest banning exports, controlling prices, punishing hoarders and subsidizing basic foodstuffs. The researchers found a sense that it was the moral duty of a government to provide for its people, sometimes linked to notions of democracy. A woman in Kenya told them, “In the new constitution, we have the right to be provided [with] food by the government.”
The moral sense also extended to the business community. A rural doctor in Bangladesh said, “The businessmen should get some moral teaching. If they were afraid of Allah and conducted business honestly, the situation would improve.”
All in all, says Hossain, “There is a popular consensus about what is legitimate, about social norms and obligations. People set moral limits to the freedom of the markets.”
High food prices are not bad news for everyone. Another IDS research fellow, Xavier Cirera, pointed out that the rises followed a long period of low food prices, which had been very hard on farmers. “We always have to ask the question, what is the real price of food? And how can governments ensure better safety nets for the poor while ensuring that traders pass the benefits of price increases back to the producers? The evidence is that farmers are getting some benefit and are responding. But they are not realizing the full benefit of higher prices.”
eb/mw
– Provided by Integrated Regional Information Networks.
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Antiretroviral drug price cuts secured amid growing funding fears
JOHANNESBURG, South Africa (IRIN) – Three international organizations have negotiated reductions on key first- and second-line, and paediatric antiretrovirals (ARVs) that will help countries save at least US$600 million over the next three years.
The Clinton Health Access Initiative (CHAI), the international drug purchasing facility UNITAID and the UK Department for International Development (DFID) made the announcement on 18 May.
The deal, expected to affect most of the 70 countries comprising CHAI’s Procurement Consortium, features notable reductions in the prices of tenofovir (TDF), efavirenz, and the second-line ritonavir-boosted atazanavir (ATV/r) used in HIV patients who have failed initial, or “first-line”, regimens.
As part of the deal, the three bodies set price ceilings for more than 40 adult and paediatric ARVs with eight pharmaceutical manufacturers and suppliers, including Cipla Ltd, Matrix Laboratories and Autobindo Pharma.
Together these eight companies account for most ARVs sold in countries with access to generic drugs, according to David Ripin, scientific director of CHAI’s Drug Access Programme.
As a result, the cost of ATV/r is down by two-thirds from just three years ago. Meanwhile, a once-a-day fixed-dose combination (FDC) pill containing TDF and efavirenz will now cost countries less than US$159 per patient per year. In 2008, low-income countries paid about $400 per patient per year for the same pill.
How did they do it?
According to UNITAID and CHAI, this success is a product of increased demand for these drugs and more efficient manufacturing of the active ingredients, which are estimated to account for as much as 75 percent of generic ARV costs.
“When you make an active ingredient, you use a multistep chemical process,” Ripin told IRIN/PlusNews. “To reduce costs, you can look for a less expensive source of raw materials of which there are a few examples, including TDF … or you can tinker with the chemical process used to make the product to make them more efficient.”
But Ripin added that doing either comes at a cost for pharmaceutical companies, for whom a change in raw material suppliers or manufacturing processes means re-applying for approval of the drug with regulatory bodies.
“Any time you change anything with the way you make a drug, you need to get regulatory approval,” he said. “You have to do a fair amount of work to prove that your product works just as well now as it did before.
“The pharmaceutical companies and generic manufacturers are fantastic at making these types of improvements… [but] they have a limited set of research and development resources available to them,” Ripin said. “They often need to make a decision where they are going to get a higher return on that research and development, and typically that comes from the introduction of new products on the market.”
According to Ripin, the key is providing companies with data on the large and growing markets for ARVs.
“We help companies evaluate for themselves whether it’s a worthwhile business opportunity,” he said. “The second key factor they have to consider is the competitive marketplace for their drugs, where there is an incentive for lower [production] costs and lower-priced products as they want to maintain their market share.”
CHAI also provides countries with data on best market prices for drugs to help inform national procurement, as was the case with South Africa’s recent ARV tender. Although South Africa is not expected to benefit from the new price cuts, the country has the largest ARV tender in the world, and could secure the drugs at competitive prices. In terms of the CHAI agreement, lower prices are available to members of the Procurement Consortium but are dependant on volumes ordered.
How low can we go?
TDF has become an important drug for many countries, including South Africa, hoping to implement the 2009 World Health Organization (WHO) HIV treatment guidelines, which recommend starting HIV patients on treatment sooner but also a shift away from more toxic ARVs to TDF.
However, the high cost of earlier treatment and better drugs has prohibited many countries from fully implementing the WHO recommendations. According to a recent report released by Médecins Sans Frontières (MSF), both Malawi and Zimbabwe reversed their move to WHO guidelines due to financial constraints.
While new price reductions bring TDF’s price closer to that of the long-time and widely adopted first-line ARV Zidovudine, further drops in TDF’s price will have to be logged to ensure widespread uptake, said Brenda Waning, coordinator of market dynamics for UNITAID.
For Waning and others like MSF, the issue of sustainable funding for the HIV response looms large ahead of the June UN meeting on HIV/AIDS in New York, rumoured to be the last for years to come, according to MSF’s report.
“There has been a lot of attention on commodities and not at other major drivers of cost,” she told IRIN/PlusNews. “We have to look at other places in the health system where we can capture cost-effectiveness.”
In particular, Waning pointed to the potential savings associated with the roll-out of new point-of-care diagnostics, which, although not high on the global agenda, will help countries task shift such testing away from scarce doctors.
Although the cost remains high, introducting FDC would help governments save on ARV shipping, transportation and storage, while improving adherence and patient outcomes.
llg/kn/mw
– Provided by Integrated Regional Information Networks.
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Wheat edges higher, amid caution over US estimates
Rabobank foresees downgrades to US government crop estimates, and cautions over cotton too. But, on the markets, wheat futures lose early gains
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Harder times as food, gas prices spiral
Cairo, Egypt (IRIN) – Abdel Moneim Ahmed was finally able to buy 10 loaves of subsidized bread after queuing for one-and-a-half hours with 30 people outside a bakery in the Egyptian capital, Cairo. Another woman, known only as Zeinab, said she had waited two hours. “You can see the problem for yourself,” she told IRIN.
The scene playing out in this El Sayeda Zeinab neighborhood symbolizes a much wider problem. For the past few weeks, Egypt, which imports half its food and subsidizes bread prices, has experienced severe shortages of this key staple.
Egyptians call it “aish”, literally meaning life. The price is fixed at five piasters (less than one US cent per loaf), against 50 piasters per unsubsidized loaf. Economists say Egyptian families spend about 40 percent of their monthly income on food.
“The real reason for the current inflation is that governments, even the existing one, do not protect consumers from merchants’ abuse,” said Ahmed El-Naggar, head economist at Ahram Center for Political and Strategic Studies, and editor in chief of its annual publication, Strategic Economic Directions.
The Egyptian economy took a bashing from protests that swept across the country earlier this year, hurting tourism revenues and affecting trade. “This led to a six percent decrease in exports in January and February,” said El-Naggar.
According to the Finance Ministry, urban consumer inflation rose to 11.5 percent in the 12 months to March, its highest level since April 2010, from 10.7 percent in February.
“We no longer buy beef and chicken,” Samira Abuzaid, a 45-year-old housewife, said. “I tell my children that we need to adapt to a diet without these two items.”
Gas scarce
Another vital commodity that has become scarce and more expensive is cooking gas.
“Gas cylinders have suddenly disappeared,” Emad Abul A’as said as he waited to buy a cylinder in the southern industrial city of Helwan. “If I do not get the cylinder from this center, I will have to pay a lot for a cylinder outside.”
Abul A’as, a 37-year-old cement factory worker and father of two, would have to pay six times the price of a subsidized gas cylinder elsewhere.
The government blames the situation in Libya and Gaza. Recently, Social Solidarity Minister Gouda Abdel Khaliq cited smuggling to Libya and Gaza as a reason for cylinder scarcity in Egypt, which imports 60 percent of its solid gas from Saudi Arabia and Algeria.
“Smugglers benefit from the difference in the price of the cylinders in Egypt,” said Hossam Arafat, chairman of the petroleum section at the Federation of Commerce Chambers. “What makes this possible is that the government subsidizes the cylinders to the tune of 90 percent here.”
Prices of other commodities have also risen dramatically in recent weeks. The prices of tomatoes, onions, green peppers, lemons, eggplants, potatoes, zucchini and beans have trebled, while items such as lentils are out of the reach of many.
“The future might be worse,” said Rashad Abdou, an economics professor from Cairo University. “The prices might increase even more.”
Consumer protection?
On- April, the World Bank said global food prices were 36 percent above their levels a year ago and remained volatile, driven in part by higher fuel costs connected to events in the Middle East and North Africa .
Another 10 percent increase in global prices could drive an additional 10 million people below the $1.25 poverty line, it added.
“More poor people are suffering and more people could become poor because of high and volatile food prices,” said World Bank President Robert Zoellick. “We have to put food first and protect the poor and vulnerable who spend most of their money on food.”
The government says it will try to bring down prices, according to Prime Minister Essam Sharaf in an address last week.
The deputy director at the at Ahram Center for Political and Strategic Studies, Abdel Fatah Al-Gibali, called for consumer protection, saying the supply of certain commodities had been monopolized by a small number of merchants, which affected the dynamics of the market.
“During the last period, or specifically since the start of the [protests] that toppled Mubarak, the society was not producing at all and the supply was less than the demand, [hence] an increase in prices,” he added.
am/neh/eo/mw
– Provided by Integrated Regional Information Networks.
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US wheat sowings hit low, while corn seedings fly
US spring wheat sowings record their slowest pace in recent history. But corn farmers plant, in one week, an area bigger than South Korea
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Oil companies Shell and Exxon rack up billions in profits on soaring oil prices
New York, NY, United States (AHN) – Royal Dutch Shell and Exxon Mobile oil companies both reported robust first quarter profits because of higher global prices.
Those higher prices amounted to $113.70 per barrel for US crude oil futures, the highest level in 2.5 years, and $125.71 per barrel for Brent crude.
That helped Anglo-Dutch firm Shell to record $6.9 billion in profits for the first three months of 2011, up a hefty 41 percent from the same period in 2010.
Texas-based Exxon group did even better reporting profits of $10.7 billion, up a whopping 69 percent from the same time last year.
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Asian markets slip as US data disappoint
Asian shares retreated as weak US output growth fuelled uncertainty about the outlook for corporate earnings while a strong Australian dollar weighed on the Sydney market
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Morning markets: grain prices jump as prayers go unanswered
Grain prices jump again as US farmers’ hopes of better weather look like being dashed. Russian growers are well behind in spring sowings too
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Unrest leaves foreign female casual workers high and dry
Sana’a, Yemen (IRIN) – The ongoing political unrest in Yemen has hit one group hard – unskilled foreign female migrant workers such as domestic workers and cleaners whose employers have either left the country or moved away from the capital, Sana’a, sources said.
“In our office, we received more than 50 Somali maids, who were all working in the Sana’a University area, but are now jobless after their employers [families] moved to their original villages,” said Mohammed Abdi Adam, chairman of the Somali Refugee Committee (SRC).
“Many others in other areas of Sana’a are now jobless as well,” he added. Most were employed by foreign expatriates or upper-class Yemeni families.
One such woman, Ethiopian refugee Marwa Yousef, 33, lives with her 10-year-old daughter Najma in a single room in a gloomy lane in the Safya area of Sana’a.
She used to earn a monthly salary of YR20,000 (US$85) working as a cleaner in a hotel in Sana’a, until she was laid off on 31 March, after the anti-government protests hit businesses.
“How can I feed myself and my daughter?” she said. “How can I pay the rent [YR9,000]? Najma needs medicines, but I don’t have money to buy them.”
According to the SRC’s Adam, the situation has created an “unprecedented blow for widows who are the only breadwinners for their families, [and] their suffering is increasing due to increasing prices of basic commodities”.
Since the protests began in mid-January several international organizations and companies have reduced their foreign staff.
Some of those laid off have not received any severance pay despite working for four or five years, said Ame Abdi Shaboo, chairman of the Oromo Refugee Committee.
To be entitled to severance pay, Yemeni labor law stipulates that there needs to have been a contract of employment signed by employer and employee.
“However, almost all these domestic servants and cleaners in low-profile hotels usually work without contracts,” Mohammed al-Ruaini, a lawyer at the Ministry of Social Affairs and Labour, told IRIN. “This makes it very difficult for us to claim their job-related rights or defend them in court.”
Shaboo reckoned hundreds of Ethiopian domestic workers and cleaners had been laid off in Sana’a since mid-February.
ay/eo/cb
– Provided by Integrated Regional Information Networks.
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