Making food, energy affordable
Escalating conflicts are reverberating throughout the world, and for Bangladesh in particular, these pose threats to food and energy security. Navigating these challenges while meeting our green transition goals might be a tall order to fill
Agriculture continues to remain the key strength for Bangladesh to overcome a series of shocks from events mainly beyond our control, such as the Covid-19 pandemic, wars and extreme weather events.
Farmers offered their best in almost all major crop seasons, despite instances of significant damages from abrupt climate events mostly ahead of the harvest. Overall crop production still remains robust, thanks to the government's firm stance to keep flow of inputs like fertilisers and electricity for irrigation uninterrupted even at the worst turn of events.
But this could not help food inflation spiralling almost out of control, digging dip into consumers' pockets. Farmers, who grew bumper crops to feed the people and saved foreign currency by cutting food import bills, are now themselves victims of soaring prices of everything they buy.
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As per the World Bank's latest commodity markets outlook, the overall global food price index looks good for 2024, as it declined 9% last year compared to the year before and is projected to fall further 2% this year and additional 3% next year.
"Good crop conditions and lower input costs, despite headwinds including El Niño, have pushed global food prices down," the October 2023 outlook said.
But worries remain for rice, our staple food, as its price has marked a substantial rise in the global market. On a year-on-year basis, maize and wheat prices are 29% and 20% lower, respectively, while rice prices are 39% higher, says the World Bank's last food security update on 14 December.
So we have to focus on local production of rice to shield our consumers from any further price shocks this year. Rice price has been on the rise even after good harvest and stocks. If the trend is not checked, it will frustrate all efforts to lower the inflation and add to worries if import becomes inevitable in case of any weather adversity as well as another supply disruptions from feared escalations of Middle East conflicts.
A World Bank blog post lists five food security risks.
Middle East conflict is one, which, if escalates and spreads, may lead to oil price spike, which will increase production and transportation costs for food and fertilisers. Further rise in gas price could also raise fertiliser prices.
El Niño impacts may lead to higher prices of sugar, rice and edible oil this year.
Besides, the export ban imposed by India, which accounts for 40% of the world's rice exports, remains a concern. Any potential Indian ban on sugar export might pose another risk for stable supply of the sweetener. Bangladesh relies on import to meet sugar demand and India is a natural choice for many food commodities.
Grain flow from Ukraine may continue even after Russia's withdrawal from the Black Sea deal, but another worry is brewing in the Red Sea from Yemen's Houthis and the West's strikes on them.
Death counts in Gaza from Israeli attacks are mounting and severe humanitarian crisis calls for intensive global intervention to save lives there from hunger.
Conflicts have disrupted supply chains and made food a weapon of war, the WHO director general said at the Global Food Security Summit in November last year.
"An even worse humanitarian disaster will unfold in Gaza if the conflict does not stop and humanitarian aid is delivered in much greater volumes," the WHO chief warned.
And climate change is destroying crops and making agriculture livelihoods unreliable for hundreds of millions of people, he points out.
On top of all these concerns, the most crucial one is our own — persisting dollar crisis which limits our import capability and exchange rate fluctuations that make our imported goods more expensive.
We have to pin hopes on the central bank's latest rate hike and pledge to stabilise the forex market, which is equally crucial to ensure energy security as we have to rely on fuel, gas and electricity imports for some more time.
The future of global energy does not look encouraging either.
The war between Israel and Hamas is likely to significantly affect global energy markets if Iran is drawn in and the US slaps further sanctions on its oil exports, the International Energy Association (IEA) warned in October, weeks after Israel launched its Gaza strikes. It hails "phenomenal rise" of renewables and predicts a very different energy ecosystem in 2030.
Energy security is, as the IEA defines, an "uninterrupted supply of energy at affordable price", where we still need to do a lot.
The global energy agency expects renewables to outstrip coal as the biggest source of electricity, citing declines in coal use in the US and Europe. But the case is opposite in Asia, where coal shows no signs of leaving the scene anytime soon.
We need to take a decision on our coal resources and swing into action to explore more local gas reserves. Until then, we have to get ready to buy more LNG in parallel to fuel oil imports, build more infrastructures to refine and store more fuel and gas.
And of course, this is the time to translate words into action on renewable energy, if we really care about the environment and sustainable growth in a world more committed than ever to green transition through cutting carbon emissions.
The IEA and World Bank's IFC jointly estimate that developing and emerging economies will need to invest $2.8trillion in 2030 — three times the amount spent in 2022 — in clean energy to meet the Paris climate goal.
Bangladesh has a carbon reduction goal too, and has to invest more in green energy transition — an area that requires more engagement from the private sector and global players.
