Pakistan, among the most vulnerable globally to climate change, has seen the highest rainfall in at least three decades. Skyrocketing prices are putting food out of reach in flood-ravaged Pakistan. The government warned that a food crisis is looming.
Pakistan already reeling from dwindling currency reserves and the fastest inflation in almost five decades faces a food shortage after torrential rains submerged a third of the country and destroyed crops. The toll of extreme flooding on Pakistan’s food security is becoming apparent, homes and livelihoods wiped out. Eight more districts were added at the weekend to the country’s calamity list of 80 areas hit by floods. The floods, which will cost an estimated $10 billion worth of damage, have claimed the lives of more than 1,300 people and forced half a million into camps. It’s also submerged large swathes of farmland and flushed away crops in a country where agriculture accounts for about a fifth of the economy. The direct crop loss to flood damage is $2.3 billion, according to an estimate by Uzair Younus, director at the Atlantic Council’s Pakistan Initiative and economist Ammar Khan. Almost 800,000 farm animals have perished, and 2 million acres of crops and orchards have been hit, according to the United Nations. More than 100 bridges and about 3,000 kilometers (1,864 miles) of roads damaged or destroyed.
“The agricultural sector is in turmoil. The cotton crop and vegetables are completely wiped out in many key areas,” said Pakistan Businesses Forum Vice President Ahmad Jawad, who grows wheat, maize, citrus and sugarcane. “Wild weather just can’t give us a break. First the heat wave, now floods.”
A Bloomberg report said the surge in food prices will add stress to an already fragile and politically divided economy that has just been regaining some funding strength after securing a $1.16 billion International Monetary Fund bailout and $9 billion in pledges from Qatar, Saudi Arabia and the UAE.
It is raising the frightening prospect of inflation hitting 30%. Pakistan already has one of the fastest inflation rates in the region, with consumer price gains rising to a 14-year high of almost 25% in July.
“The main concern from the floods is the impact on inflation,” said Amreen Soorani, head of research at JS Global Capital. “Food shortage from floods the last time in 2010 almost doubled food inflation in two months. We’re already in a high inflationary environment, making the scenario even more difficult.”
Consumer price gains quickened to 27.26% in August, rising for a sixth straight month before the full impact of the flooding is felt. Food inflation, that makes up a third to the basket, climbed to 29.5% last month. The calculus doesn’t include yet the full impact of energy prices rising by 50%, a condition of the IMF loan.
Inflation could accelerate to 30% in the coming two months and that would take the average price gains this fiscal year to 23%-24%, surpassing the central bank’s estimate of 18%-20%, according to Fahad Rauf, head of research at Ismail Iqbal Securities.
The damage to food supplies will probably boost the nation’s need for imports and increase the pressure on global agricultural markets. Steps are being taken to import vegetables and other items from Iran and Afghanistan. Pakistan is also considering a temporary land route to allow duty-free shipments from arch-rival India. Jawad said. “Indian imports are needed to help bring prices down.”
Sowing next year’s wheat crop, which starts in October, will be another challenge. Even before the floods, the country was facing a wheat shortage of about 2.6 million tons.
Pakistan Post-Flood Situation: Vegetable Costs Up 500% Threaten To Fuel Inflation| Countercurrents
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