Modding the FAO food price index to get closer to bazaar reality

The FAO has released its latest food price index data, and the central message for this month is: little change from the last month. The question for us, as we read about and hear about steadily rising food price inflation in the countries of the South, is: why is the FAO food price index not capturing real inflation for these populations?

This chart is a way to rectify that lack. In this, I have used the index data as the composite (food) plus the components (meat, dairy, cereals, oils, sugar) directly from the data, but have re-based them.

The familiar old blue panel.

I have used the monthly data from 2008 January to 2012 March, and re-based them (six series) on each of their minima for the period. Thus, the minima are: Food, 141.3 in 2009 Feb; Meat, 120.4 in 2009 Feb; Dairy, 114.3 in 2009 Feb; Cereals, 151.2 in 2010 June; Oils, 127.3 in 2008 December; and Sugar, 166.7 in 2008 December.

The current readings for all six series (2012 March) are: Food 215.9; Meat 178.2; Dairy 197.0; Cereals 227.0; Oils 244.9; Sugar 341.9.

What this chart does is show the variation by month from the minimum for each series for the period. It is another way of looking at how the indices have moved from a point of low reference in the recent past, and to my mind is more evocative of the real situation in rural and urban food markets in the South.

The April release can be found here. And this is what FAO’s usually bland commentary on the latest month’s movements is: “The FAO Food Price Index (FFPI) averaged 216 points in March 2012, virtually unchanged from 215 points in February. Among the various commodity groups, only oils prices showed strength, compensating for falling dairy quotations, while the indices of cereals, sugar and meat prices were largely unchanged from last month’s level.”

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Why the West wants to wreck UNCTAD

How much damage do the financial and ruling elites of the western power blocs think they can get away with? A great deal, it is clear, judging from the stoutness of the defences raised to protect the UNCTAD (United Nations Conference on Trade and Development) and its analytical mandate.

One of the less conspicuous UN agencies, UNCTAD was set up in 1964 to support developing countries to strengthen their weak position in international economic structures, and to design national development strategies. As Martin Khor, Executive Director of the South Centre, explained, it became a kind of secretariat on behalf of developing countries, providing a small pro-development balance to the huge organisations dominated by the developed countries, such as the OECD, the IMF and World Bank.

In the past 20 years, the developed countries (OECD) have tried to curb the pro-South orientation of the UNCTAD secretariat and its many reports. The inter-governmental discussions became less significant, while UNCTAD’s pro-development mission was increasingly challenged by the developed countries.

What is this mission? UNCTAD says it promotes the development-friendly integration of developing countries into the world economy, that it has progressively evolved into an authoritative knowledge-based institution whose work aims to help shape current policy debates and thinking on development, with a particular focus on ensuring that domestic policies and international action are mutually supportive in bringing about sustainable development.

Note the stress on development, and not market, not trade and not finance. This is the problem for those who would seek to scuttle UNCTAD. It is a trend that seemed to have subsided in the past decade, but in the past two months, the meetings in Geneva to prepare for UNCTAD XIII, some developed countries have reportedly attempted to dilute the areas of future work of UNCTAD, to the frustration of the G77 and China.

Hence the statement, which is now widely available on the internet, by civil society organisations which have gathered in Doha, Qatar, for UNCTAD XIII meeting (21-26 April), which has said:

“The importance of UNCTAD’s work has been highlighted by the global financial and economic crisis and its continuing catastrophic effects on peoples and economies. Over the years while the Bretton Woods twins led the cheerleading for unbridled liberalisation and deregulation of markets and finances which produced the crisis, UNCTAD’s analysis consistently pointed out the dangers of these policies. The economic turmoil provoked by the crisis makes UNCTAD’s mandate and work even more relevant.”

“CSOs in Doha demand that UNCTAD’s crucial research and analytical work especially on 1) the global financial crisis, and 2) other development challenges including those arising from globalisation be maintained. UNCTAD serves as an important countervailing forum where the interests of developing countries can be paramount when trade, development and interrelated issues are being discussed. This value and its proven track record is why the attack on UNCTAD’s mandate has to be resisted.”

The CSOs in Doha are concerned that group of countries which includes Japan, USA, Switzerland, Canada, South Korea, Australia, New Zealand and which also includes the European Union (EU) are so opposed to UNCTAD’s vital analytical and advisory work on finance and responses to the crisis that they are refusing to even reaffirm UNCTAD’s mandate as agreed in Accra.

What is clear is that this group now sees UNCTAD’s work as a global defence against the effects of new economic policies, which in their many mutations have since the early 1980s heaped unspeakable misery on hundreds of millions around the world, in the South. These policies, as UNCTAD has also helped show, have led directly and indirectly to pervasive and chronic economic inequality, insecurity, unemployment and under-employment, casualisation, informalisation, a heightened level of labour exploitation, the emasculation of protective factory acts and labour laws.

That is why the civil society organisations present in Doha for UNCTAD XIII contrasted the interest the major powers have shown in strengthening the IMF and World Bank (and in using bodies of questionable accountability such as the G20 to block truly multilateral responses to the crisis of neoliberalism) with their negative attitude to UNCTAD. They noted that the IMF and World Bank continue to peddle policies which caused and have been discredited by the crisis. And they have demanded that the OECD-oriented group of would-be UNCTAD wreckers keep their hands off the organisation.