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 nots' 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 severely impacted by rising food prices and price will continue to rise and our suffering will continue as long as our economy continues to be run according to capitalist principles and the dictates of foreign institutions. We must now return to implementing the Guidance revealed by Allah (swt) to salvage ourselves from this life of hardship.
Allah (swt) says in the noble Qur’an:
"But whosoever turns away from My Reminder, verily for him is a life of hardship and We shall raise him up blind on the Day of Resurrection” [TMQ 20:124]
Allah (swt) sent His Reminder for guiding mankind to a better life and has provided in it a comprehensive system for all life’s affairs including a detailed system for the economy. The economic system of Islam is based upon the commands and prohibitions of Allah (swt) and it is free from the errors and corruption of the man made capitalist system. Only the Islamic economic system implemented by Islamic KHILAFAH government can solve the issue of price hike in an efficient and speedy manner as well as ensure economic prosperity for the people.
The KHILAFAH government will take the following steps to solve the problem of price hike and ensure a decent livelihood for the people:
1. 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.
2. The imperialist financial institutions such as the WB and IMF will be thrown out of from our country immediately. These institutions have ruined our economy and imposed foreign capitalist’s control over our economy.
3. In order to achieve self-sufficiency in food, the KHILAFAH state will give priority to and re-organize the agricultural sector in the following ways:
• The KHILAFAH will make use of all the arable land in the country. There are large amounts of land owned by landlords who never make use of it. Islam prohibits such practices of hoarding land. Anyone who does not cultivate his land for three years, the Islamic state will take this land from him and grant it to someone who can utilize it. This is based upon a number of narration’s attributed to Umar (ra) which were collected by hadith scholars and considered Ijma:
“Whoever neglected a land for three years without using it and another came and used it, it becomes his”
• The KHILAFAH will develop and provide latest agricultural methods and technologies to increase the productivity of land. It will solve the problem of chronic fertilizer crisis by building local fertilizer industry and ensuring that farmers have supply of fertilizers during cultivation season.
• It will grant donations or interest free loans to the poor farmers so that they can make productive use of their land.
4. The KHILAFAH state will subsidize the essential food items. For those citizens, who are unable to fend for themselves, the Caliphate will buy foodstuffs from the open market and tend to their needs. One of the fundamental principles of the Islamic economic system is to ensure food-clothing-shelter for the people and it obliges the Khalifah to adopt policies which secures these basic needs for all citizens of the state. The Messenger (saw) said:
“The son of Adam has no better right than that he would have a house to dwell in, a piece of cloth to hide his nakedness and a piece of bread and water.” [Tirmidhi]
It is from this sense of his duty that Khalifah Umar (ra) opened the doors of Bait-ul-Mal to the people during the famine in Medina.
5. The KHILAFAH will prohibit food speculation, monopolies, hoarding, cheating and price fixing, thereby ensuring that all citizens of the state are able to afford food. Muhammad (saw) said:
“Whoever cheats is not one of us.” [Muslim]
“Whoever monopolizes is a wrongdoer.” [Muslim]
6. The KHILAFAH state will ensure proper distribution of wealth in a fair manner so that people have a decent income and are able to afford the essential items. The current capitalist economic system keeps wealth in the hands of the few through its system of usurious banking, privatization, corruption, hoarding, monopolies, etc. On the other hand the Islamic economic system prevents the circulation of wealth within a small section of the society. Allah (swt) said in the noble Qur’an:
“Lest it (wealth) circulates solely among the wealthy amongst you” [TMQ 59:7]
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