tbl issue 3 grain drain

8/14/2019 TBL Issue 3 Grain Drain

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contents

global briefs

csr toolkit

csr talk

social partnership toolkit

breather

book in focus

musings

regulars

7people - planet - profits

24

30

strategic humour

37

40

csr and low-income housing

intent - care & growth

cross subsidy model

sustainable value

47

48future food

grain drain

hunger-poverty nexus

liberalspeak

feed or fuel?

socialspeak

food & beverage report

corporate volunteerism

opportunity fortified

common sense

management spin

cross-cultural observation

obs-inion

features

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14

17

20

22

25

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Editor-in-ChiefZohare Ali Shariff

Editorial DirectorKhadeeja Balkhi

Managing EditorRutaba Ahmed

Research, Distribution & DevelopmentRaza TahirMehfooz Aleem

CreativesKamran RaufShireen Lotia

ReprintIn line with our mission,we encourage reproduction of

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PublisherAsiatic Public Relations Network(Private) Limited

Printed atNikmat Printers, Karachi

DisclaimerThe views expressed in tbl are theauthors and not necessarily shared bytbl and/or APR

DeclarationFrom the office ofDistrict Coordination Officer,City District Government KarachiNO.DCO/DDO/LAW/CDGK/109/2007,

KarachiDated May 22, 2007

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elusive commodities, starving masses

and ruthless spectulators

the hunger opportunity

commodity crises: a liberal capitalist perspective

the losing battle: fuel versus food

world wheat whereabouts

the role of the food & beverage sector in expanding economic opportunity

a diary of a food volunteer

malnutrition in pakistan: the hidden hunger

the grains of truth in crises

pakistans csr mentality change

csr for csr

common sense approaches to a food secure pakistan

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The tbl team expresses its profound gratitude tothe companies whose names appear below, fortheir agreement to support this publication.Bringing out a knowledge-based publication like

tbl involves considerable effort and costs. It maynot have been possible to bring out tbl in itspresent format without the invaluable supportand contribution of our Founder Sponsors.

Through their support to tbl our FounderSponsors have confirmed that they share ourMission of disseminating triple bottom-lineknowledge to a diversified group includingcorporate, social development and generalbusiness groups. We believe that helping tospread awareness of true CSR is in itself anelement of CSR. By becoming our sponsors, thefollowing companies have taken that vital firststep with us in our journey to facilitate awarenessand understanding of true CSR in our country.

The term Triple Bottom-Line (TBL), which translatesinto People, Planet, Profits, captures an expandedspectrum of values and criteria for measuringorganisational (and societal) success - social,environmental and economic.

Through our masthead we personify the term TBL.Essentially, our bottom line is a grey bar with aburgundy border which runs through the masthead,at some points overlapping the letters and runningunder them at others. Here t stands for triple and isrepresented through the three shades of the letter.The b stands for bottom and it sits below our grey

line with the line going through it - since thismagazine is a below the line activity, the two gel intogether. The l stands for line and the letter sitscomfortably on top of the grey bottom line.

Mr. Tanveer B. Lone is indeed a busy man, laden withhis struggle for the truth in the Sustainability industry.His first name, Tanveer, according to our wonderfulFerozsons Urdu-English dictionary means

'illuminating'. We feel he is sometimes the seeker ofenlightenment, and at others, the seemingly lonebearer. Driven towards his destination the true lightof CSR he sometimes feels like a lone voice buriedamidst the complex factors he confronts on the way.Yet as he sets forth, oft-alone on this journey, he knowshe will meet companions along the sub-paths his

journey takes, merging at destinations common withhim. There will be occasions where we can all relate tohim. At times, though his capitalist-training-bredfinancial focus may fluster us and his understandingtowards disseminating the true implications of thetriple bottom-line. Watch out for Mr. TBL, as he shareshis views and thoughts in articles and other features inthis issue! Feel free to share ideas with Mr. TBL that

might help clear the oft-murky waters he'll encounterin his expedition at [email protected]

acknowledgement

mr tbl

English Biscuit Manufacturers(Private) Limited

Founder Sponsor

National Foods Limited

Founder Sponsor


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Egged on by his peers, the orphan boy OliverTwist summons up the courage one day topolitely ask for more gruel. In the global scheme

of things, the 'orphaned' third world countries may notbe equally polite in times to come, as shortages ofstaple food items spread across the planet. Alreadyfood riots have occurred in a number of countries andhunger based anger can almost certainly be ventedbeyond borders in the future.

This third issue of TBL examines perhaps the mostpotent, albeit perhaps not fully appreciated, globalcrisis that is brewing up quite rapidly - the food crisis.One may well ask what the connection is between acorporate triple bottom line strategy and a global foodcrisis. The immediate and obvious answer is of coursethat a hungry world is an unhappy world and ahungry and unhappy populace will not be a consumerof the various goods and services that the corporateworld churns out. But there are far deeper implicationsfor the corporate sector than a slackening of demandfuelling an economic slowdown. The well-researchedarticles in this issue touch on different aspects and

provide (no pun intended) food for thought for far-sighted companies.

While it may seem somewhat unfair to expect a CSRsolution to every socio-economic issue that crops up,the fact remains that to be sustainable a CSR strategyneeds to be dynamic; responding to change as timepasses. Thus the pursuit of the triple bottom line andstrategizing for CSR must continuously evolve, both inqualitative and quantitative terms. And so while theprincipal responsibility for countering a global foodcrisis must remain with international institutions likethe UN and its affiliates and with governments,

especially the governments of leading economicpowers, the corporate sector too has a definite role toplay.

The toolkit in this issue will prove to be useful in this

regard, as it is designed to be functional. Indeed ourprevious issues also included toolkits on other aspectsof CSR and we at TBL would very much appreciate ifreaders who have applied these toolkits could give usfeedback on the progress and outcome. Our swornmission is to be a catalyst for positive change and weneed your support to fulfil the demands of this role.

The interview in this issue is of Etsko Schuitema,Managing Member of Schuitema Associates, anestablished consultancy in South Africa that specializesin organizational transformation through peoplegrowth. His research of 2 decades has resulted in theLeadership - Care & Growth Model. Schuitema alsocurrently teaches his unique approach at CambridgeUniversity, U.K., and at a number of South Africanuniversities. We were fortunate enough to conduct thisinterview while Schuitema was in Pakistan veryrecently, as it fits in very well with our people-focus ofthe current issue of TBL. The global 'grain drain' isafter all ultimately about people - the underfed OliverTwists of this world; the Fagins and the Artful Dodgerswho perpetuate and exacerbate food shortages and the

Mr. Brownlows, the corporate leaders who attempt toput things right.

Finally, do you know any one who would benefit fromTBL? Please do send us particulars of all such personsand if they are not already in our database andreceiving TBL, we shall now include them for futureissues.

Sincerely,

Zohare Ali ShariffEditor in Chief

editors note

Please Sir, I want some more

This publication is being sent complimentary to 1500 decision-makers and opinion-formers in the corporate sector, the government, NGOsector, international institutions and academia. Recognising that your sphere of work has the potential to compliment and reinforce theessence of our mission, we have taken the liberty to present tbl to you. It is also available at selected outlets.

We would love to hear from you. Please do contact us at [email protected] with your thoughts, feedback and input from your corporate or socialpractices.

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letters to the editor

The publication overall and thestandard of content isimpressive and very

professional. You are a specializedgroup of people in this field and thepublication covers a wide range ofsubjects on CSR and social sectordevelopment. I am a BusinessManagement consultant byprofession in the field of real estate,advisory, verification etc., and I amheavily involved in social sectordevelopment work. We sharecommon goals and I believe thatTBL is an excellent initiative forpromoting a true understanding ofCSR and creating awareness amongthe masses.

M. Ali RasheedEnvironmentalistSewa Social Environmental WelfareAssociationKarachi

WWF Pakistan was pleasedto receive the publicationTBL, which encourages the

corporate sector to recognise both itsresponsibility, and more important,the opportunity to help conservePakistan's environment. They can dothis by initiating activities whichboth review the way they conductbusiness, and by directly supportingworthwhile initiatives.

We wish TBL well, and hope that itwill continue to inspire the corporatesector to make a greater contributiontowards improving natureconservation in Pakistan.

Ali Habib

Director GeneralWWF-PakistanLahore

It's a great addition and hopefullywill go a long way in creatingawareness over the total gambit

of CSR.

Congratulations and best wishes forfuture publications.

Pervez Ghias

Chief Executive OfficerIndus Motor CompanyKarachi

It has excellent articles on CSRand about companies thatintegrate CSR in their core

business. It would be interesting toread more articles about companiesand the impact of their activities onthe environment. What are thecompanies actually doing tominimize environmental impacts?Are they investing in what theymight sow in the years to come?What is the future of CSR in

Pakistan?

I look forward to future issues ofTBL.

Mohammad OsamaAssistant ManagerCorporate PlanningIndus Motor CompanyKarachi

Ireally liked the second edition ofyou magazine and thank you forletting GRI contribute.

Katherine Miles Hill

Network CommunicationsCoordinatorGlobal Reporting InitiativeAmsterdam

Dear Readers,

Thank you for sharing with us your

valuable feedback and views on

TBL.

Mr. Rasheed, we appreciate your

compliments on the publications

layout and the standard of content.

Although we follow a theme for

each issue of TBL, we publish

material on various CSR subjects to

cater to the interests of all our

readers. Keeping in view your

experience in social development

and our shared goal of creating an

awareness of CSR, we look forward

to your continued feedback.

Mr. Habib, thank you for your

continued feedback on TBL. We

believe that collaboration between

the corporate sector and

organizations such as WWF is

indeed fundamental to creating and

building valuable sustainablelinkages and worthwhile initiatives.

Mr. Osama, thank you for sharing

your views and suggestions. The

theme of the second issue of TBL

was eco-efficiency, and included

various articles on this subject. In

future issues, we will continue to

publish material that would be

informative and insightful to our

readers.

Mr. Ghias and Ms. Miles, thank you

for taking the time to write to us

and for your encouragement and

compliments on TBL.

We hope that TBL will continue to

serve as a platform for creating

wider awareness and

understanding of CSR through our

readers active contribution and

debate.

Editorial Team


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Giant Space Food: China'sSolution to Food CrisesGovernments all around are worldare reacting to the global foodshortage by growing more food.The Chinese, however are dealingwith the food shortage by growingthe same amount of food - justreally, really big. The ChineseAcademy of Sciences iscoordinating this uniqueprogramme whereby food seeds getblasted to outer space and afterthey return, transform intoenormous, exceptionally-sizedfoods. Picture 210-poundpumpkins, 2-pound tomatoes, andcucumbers that are over 2-feet long.This programme currently feedsfamilies in 22 of China's provinces,which are taking part in thisprogramme. Scientists have foundno definitive explanation as to why

"space seeds" mutate. Somespeculate that it may be a result ofcosmic radiation, micro-gravity,and magnetic fields. There isseemingly no reason that spaceseeds should be a miracle food, andenvironmentalists worry about theunknown danger to our health ofspace food.

The China Academy of Sciencesfirst started looking at the benefitsof growing seeds in space in 1987.

Two years ago, the Shijian-8, thefirst recoverable satellite designedsolely to carry space seeds, wasblasted into outer space on China'sLong March rocket, with more than2,000 seeds. Once the seeds arereturned from space, they arecultivated and only fruit orvegetables that showimprovements in size, taste orvitamin and mineral content areselected. Vast farms are being usedto cultivate crops as space fruit andvegetables are put on dinner tablesacross China.

According to Chinese expert LoZhigang, "some of China's spaceseed products are already exportedto Singapore, Thailand, Malaysiaand Japan. These include breeds ofcucumber, sweet pepper, tomatoesand broccoli." Chinese scientists

claim some space fruit andvegetables are better than theoriginal. The Vitamin C content insome vegetables is nearly threetimes higher and there is a markedincrease in trace elements such aszinc. Yields of space rice are also 25per cent higher. To date China hasbred more than 50 new species ofplants and has plans to producemore than 200 new species.

Recycling Sewage Water:Safer, More Efficient OptionCities in the U.S. are recyclingwastewater for drinking, through aprocess called indirect potable use.This initiative is being called "toiletto tap" proposals by its opponents,due to the drinking-former-toilet-water gag factor and also the highcost involved.

Cities across the U.S. have beenusing recycled wastewater since

decades for nonpotable needs, likeagriculture and landscaping. Thus,the technology already exists. In ElPaso, Texas, indirect potable reuse,supplies 40 percent of the city'sdrinking water; in Fairfax, Va., itsupplies 5 percent. Orange County,California established earlier thisyear, the largest and most high-techwater-recycling system in theworld that churns out 70 milliondrinkable gallons of water a dayfrom effluent. Los Angeles plans to

recycle 4.9 billion gallons ofwastewater by 2019.

It is a three-step process: Sewerwater that has already been treatedby the county's sanitation districtgoes through a microfilter toremove solids and bacteria, andthen undergoes a reverse-osmosistreatment. Finally, it is treated withultraviolet light and hydrogenperoxide to get rid of contaminantsthat are left.

Recycling sewage water is a more

efficient and safe option, especiallywhen compared to sea water.Desalination of ocean water iseconomically and environmentallymuch more expensive than sewage-water recycling, according to arecent report by the Pacific

Institute, California. OrangeCounty water officials estimatedesalinated water costs between$800 and $2,000 per acre-foot toproduce, while its recycled waterruns about $525 per acre-foot.Desalination also uses more energy(and thus produces moregreenhouse gas emissions), killstiny marine organisms that getsucked up into the processingplant, and produces a brine by-product laced with chemicals that

goes back into the ocean.

According to experts, reverseosmosis coupled with ultravioletlight and hydrogen peroxide treatswastewater beyond what federaland state drinking standardsrequire, they say. TheEnvironmental Protection Agency(EPA) has conducted research inDenver and San Diego on the safetyof direct potable reuse and foundrecycled water is often of betterquality than existing drinkingwater.

Researchers Aim to TurnAnimal Waste into PlasticResearchers in New Zealand havedeveloped a process to convertanimal protein waste - that wouldbe blood and feathers - into plastic."The material we can produce hasthe strength of polyethylene, theplastic used in milk bottles andplastic supermarket bags, but it'sfully biodegradable," says Dr. JohanVerbeek, adding, "Plant proteinshave successfully been used tomake bioplastics, but animalprotein has always ended upgumming up the extruder." Mmm -pass that milk bottle! The bioplasticwould actually likely end up asagricultural sheeting, seedlingtrays, plant pots, and the like. SaysVerbeek: "The aim is to stay awayfrom any food packaging."

That's probably for the best.

Shared by Grist, an online environmental news magazine

P

LANET


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grain drain

by mariam katzfor tbl

elusivecommodities,starving massesand ruthless

speculators

In recent months, the food crisis has increasingly been in thenews. There have been riots in many different countries allover the world including Mexico, Egypt, India and Yemendue to the increase in food prices. Even though these riotshave only happened recently, the increase in food prices hasbeen building since 2005. Between 1974 and 2005, food pricesactually dropped 75 percent and have since increased by75 percent, according to Fritschel in an article published inOpen Democracy. In the last year, wheat prices haveincreased by 130 percent, soy beans by 87 percent and rice by74 percent, say McKir and Stewart in The Observer. April2008. Prices for other staples such as sorghum and cassavahave also risen considerably, greatly affecting developingcountries.

Many economists believe that prices will keep rising for theforeseeable future due to five main factors: high speculationin commodities markets, the lack of availability of cheap oil,rising meat consumption in developing countries, biofuelsand lastly, climate change.


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Speculation inCommodities MarketsFood prices have risen due tospeculation, but it is extremely

difficult to measure. Speculationmeans that many investors areputting money into commodities,creating a market that is likely tofluctuate - and remain in theircontrol, skewing market forces.Many people believe thatspeculation is not happeningbecause food reserves are atextremely low levels andspeculation tends to promotehoarding of resources. According tothe Food and Agriculture

Organization (FAO), food reservesare at their lowest in 35 years.However, in spite of this, there isstill evidence that speculation isincreasing food prices. Investmentsin corn, soy, wheat and cattle haveincreased to $47 billion now from$10 billion in 2006, according toHanim Adnan, news editor ofStarBiz. Because of this, somecountries, including India, are nowprohibiting futures trading in foodcommodities. This action is thoughtto decrease food price inflation.However, this is but a temporarymeasure. In the short term,investors should stop chasing toofew commodities and invest moneyin true TBL-based initiativesinstead.

The Effects of High OilPricesFood prices increasingly follow oilprices - which have skyrocketed inrecent years. A barrel of oil now

costs approximately $130; inJanuary of this year, oil cost $100per barrel. A Food Policy Report bythe International Food PolicyResearch Institute (IFPRI) statesthat since 2000, oil and wheat priceshave tracked each other. Bothincreased three times what theywere before.

Many scientists and economistsbelieve that we have alreadyreached peak oil, meaning thatthere will be a point at which oilproduction will start to decline and

prices will increase indefinitely dueto this. In the last 145 years, theworld has used between 2 and 2.5trillion barrels of oil, which isapproximately half of the supplies

available; in the next 40 years, it isexpected that the other half will beused because of the rise inconsumption from countries suchas India and China. In addition,98 percent of the oil the world usescomes from just 45 countries andhalf of these have reached peakproduction, according to a reporttitled 'Peak Oil and Food Security:Fuelling a Food Crises' by thePacific Ecologist.

In the developed world, this hasalready started to be a problem forfood prices, mainly due to the factthat much of the food bought therecomes from supermarkets, whichtend to use Heavy Goods Vehicles(HGV) that require a lot of gas. Inaddition, the type of industrialfarming done in the developedworld uses 50 times more energythan traditional farming, accordingto the report. This is due toincreased use of pesticides and

nitrogen fertilizers, the latter ofwhich require 2 litres of diesel forevery kilogram. In addition toincreasing the food crisis, this hasalso led to a decrease in the qualityof soil and a degrading in thequality of water. As oil depletes,the developed world should movetoward farming with less fossilfuels.

Meat ConsumptionAs the developing world has

grown stronger economically,demand for meat and other luxuryitems has also grown. In China,meat consumption has risen150 percent since 1980, state McKieand Stewart. In the last 15 years,meat consumption in India hasrisen 40 percent.

Because cattle are mainly fed grain,more grain has been fed to cattleinstead of humans, creating ashortage. In addition, as meatconsumption rises, so do prices.

Since May 2007, meat prices have

risen 12 percent. It is important tonote that the production of meat isa big contributor to climate change.According to the New Scientist, "akilogram of beef is responsible for

more greenhouse gas emissionsand other pollution than driving for3 hours while leaving all the lightson back home." Thus, if meatconsumption continues unabated,both food prices and the climatewill suffer. The developed worldshould set an example and starteating less meat. In fact, if just one-seventh of calories in the U.S wereshifted from red meat to chicken,fish and vegetables, moregreenhouse gas emissions would be

saved than if all food was boughtfrom local sources. So much forfood miles calculations.

Biofuels: Fuelling Cars,not PeopleBiofuels were once viewed as a wayto decrease emissions and increaseenergy independence for thedeveloped world; however, it hasbecome clear in recent months thatbiofuels are in fact a contributor tohigh food prices. Someorganizations such as theInternational Food Policy ResearchInstitute believe that biofuelsaccount for as much as 25 to33 percent of food price inflation;however, the FAO believes that itmay only account for 10 to15 percent. The main reason whybiofuels have contributed so muchtoward food price inflation isbecause the U.S is the world'slargest exporter of corn and muchof the corn harvest in recent months

has gone towards biofuels. In 2007,when the U.S experienced a recordcorn harvest, one-third of the cropwas diverted to biofuels, accordingto the Financial Post.. Since then,the price of corn has risen44 percent.

However, this has been verybeneficial for farmers who havebegun growing corn for biofuels -not food.

In addition, even if 20 percent of


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the corn in the U.S was diverted forbiofuels, it would only be enoughfor 2 percent of U.S car use,according to The Guardian, UK.Biofuels are also affecting other

parts of the world such asIndonesia. The European Union(EU) has a mandate that by 2020,biofuels will contribute 10 percentof transport fuel. Much of the EUbiofuel will come from palm oil,which is being grown in Indonesiaand other tropical countries.Unfortunately, the best place togrow these palm trees is in clearedrainforest, which contributes togreenhouse gas emissions. Partlydue to palm, Indonesia's rainforest

will be 98 percent gone by 2022.Many farmers' lands have also beenconfiscated by palm oil companies,contributing to poverty.

Climate ChangeIn recent years, the changingclimate has affected crops all overthe world. In Australia, an ongoingdrought has decreased the riceharvest by a staggering 98 percent.This is an unfortunate situationbecause much of the rice grown

today grows very close to sea leveland these fields may becomeflooded as a result of rising sealevels. Already, floods in Chinahave destroyed many rice as well ascorn crops. In addition to rice,many other crops will be affectedby higher temperatures. By 2020, itis expected that agricultural yieldsin the developing world will dropby 20 percent, according to theWorld Situation Report by theInternational Food Policy Research

Institute, December 2007.

Next Steps?The food crisis clearly has manycauses. It is not enough to justtackle one area, but there are someshort term steps that can be taken.Firstly, developed countries have tocontribute more money towardsemergency food needed for theWorld Food Programme, which isnow asking for $755 millionbecause of rising food prices,

according to a United Nations press

statement made in April 2008.

Although many countries such asthe U.S. and Canada prefer to givefood instead of money, money is a

better asset in this case because itcan be used to purchase foodgrown locally, which decreasesgreenhouse gas emissions. Somecountries including Vietnam andIndia, have begun to ban exports.However, some countries that areeven poorer import much of theirfood such as Haiti, Liberia andZimbabwe which import 40 percentof their food, states Fritschel. Ifexports continue to be banned,poor countries will suffer.

In the long term, diets will have tochange. As the developing worldbecomes richer, their lifestyles areoften modeled on the developedworld, which consumes a largeamount of red meat. In the U.S., theaverage person consumes 41.8kilograms of beef per year whilethe Chinese only eat 5.4 kilogramsand India just 1.3, according toLloyd Alter in treehugger, May2008. The consumption of beef has

many implications; firstly, itincreases greenhouse gasemissions, which the planet cannotafford. It also increases the price ofcorn, which people in developingcountries cannot afford. Ifincreasing amounts of corn arediverted toward biofuels and forfeeding cattle, there will be hardlyany left for growing populations inthe developing world. And ofcourse, red meat is very high incholesterol, and contributes to evergrowing rates of heart disease.

The food crisis is now having animpact on many countries all overthe world, both developed anddeveloping. The corporate sectorhas a large role to play becausemany large multinationalcorporations are reaping the profitsof this devastating impact.

Archer Daniels Midland, whichprocesses soy, corn and wheat, hasreported a 42 percent increase in

earnings in just 2008 alone. This

money should be fed back todeveloping countries that arestruggling with food supply. Manypolicies in the developed worldsuch as subsidies for biofuels must

end as well so that families can feedthemselves first, and cars second.As the food crisis becomes evermore evident, countries must worktogether to find solutions.

References

1. Heidi Fritschel "The Price of Food:Ingredients of a Food Crisis"http://www.opendemocracy.net/article/globali-sation/the_price_of_food_ingredients_of_a_global_crisis

2. Robin McKie and Heather Stewart "Hunger.Strikes. Riots. The Food Crisis Bites"http://www.guardian.co.uk/environment/2008/apr/13/food.climatechange

3. Hanim Adnan "Speculation wreaking havocon food prices"http://biz.thestar.com.my/news/story.asp?file=/2008/5/22/business/21321147&sec=business

4. BBC News "Oil hits $100barrel"

5. Joachim von Braun "The World FoodSituation: New Driving Forces and RequiredActions" http://www.ifpri.org/pubs/fpr/pr18.pdf

6. Caroline Lucas, Andy Jones and ColinHines "Peak oil and Food Security: Fuelling aFood Crisis"http://www.pacificecologist.org/archive/14/peak-oil-part-one.pdf

7. Alia McMullen "Forget Oil, the New GlobalCrisis is Food"http://www.financialpost.com/story.html?id=213343

8. Lloyd Alter "Why do Americans Think theyDeserve to Eat More than Indians?"

about the writer

Miriam Katz is a freelance writer basedin London. She currently writes for theEnvironmental Peace Review. Herareas of interest include environmentalissues, renewable energy, biofuels andclimate change. She holds a Bachelorsin Arts in Political Science andEnvironmental Studies from theUniversity of Toronto. She can bereached at [email protected]


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hunger-poverty nexus

by fouzia ishaque

for tbl

Hunger and itsImplicationsThe Food and Agriculture

Organization of the United Nationsin its report 'The State of FoodInsecurity in the World' states:"In economic terms the case is morecomplex but no less cogent. Everychild whose physical and mentaldevelopment is stunted by hungerand malnutrition stands to lose 5 to10 percent in lifetime earnings. Ona global scale, every year thathunger persists at current levelscauses deaths and disability thatwill cost developing countries

future productivity with a presentdiscounted value of US 500 billion,or more."

Hunger and malnutrition inflictheavy costs on individuals,communities and nations. 'TheState of Food Insecurity in theWorld' report also identified thatdeficiencies and the lack of essentialvitamins and minerals cost morethan 5 million children their liveseach year. It costs households in thedeveloping world more than 220

million years of productive lifefrom family members whose livesare cut short or impaired bydisabilities due to malnutrition. The

far-arching implications of hungercost developing countries billionsof dollars in lost productivity.

Manifestations of the poverty virusare not just limited to theimmediate effecters but the overalleconomy of the country and thebusiness sector can never separateitself from such a stark reality.

Why Businesses MustTake ActionOne might argue that "the business

of business is business" - but thenthis is precisely what givescorporations the capability andcredibility to expand theireconomic opportunity. Accordingto the Corporate Watch survey, outof the world's 100 largesteconomies, 51 are now globalcorporations. Only 49 are countries.

Ironically, instead of creatinguniformity of access, opportunityand choice, the top 200 corporations

are creating what some might call aglobal economic apartheid - and nota global village.

The biggest national andmultinational banks vow in theirTV commercials of easy accessloans, 24/7 service and fuss freeprocesses. Yet, these banks onlyserve the documented andbankable population of Pakistanwhere for a small investor getting aloan from the bank is nothing shortof winning a battle. Even if we look

the hunger opportunity

The World Bank estimates that, as of 2008 (2004 statistics), there areabout 982 million poor people in developing countries who live onUS$ 1 a day or less (World Bank, Understanding Poverty, Chen 2004).The most recent United Nations Food and Agriculture Organization(FAO) estimate states that 854 million people worldwide areundernourished. This is 12.6 percent of the estimated worldpopulation of 6.6 billion. Most of the undernourished -820 million- arein developing countries. Undernutrition plays a role in at least half of

all child deaths each year, worldwide.

A fundamental question that needs to be asked is, why is it importantfor the corporate sector to be concerned about the startling facts onpoverty and hunger.

Every child

whose physical and

mental development

is stunted by hunger

and malnutrition

stands to lose 5 to10 percent inlifetime earnings


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at the statistics provided by thegovernment, based on Pakistan'scurrent population of an estimated160 million, 24 percent translatesinto more than 38 million peopleliving below the poverty line.

However, independent analysts,claim that the poverty level has notdecreased and that the number ofpeople living below the povertyline is still about 34 percent,according to a recent news story inThe News.

Looking at these statistics andPakistan's profile as apredominantly agrarian economy,it follows that agriculture should bethe focus of the economic policymakers. Regrettably, agriculture

has had a zigzag history in our realGDP contributions.

In a country of Pakistan's sizewhere population growth hasmaintained a steady upwardstream, feeding people is an uphilltask - especially analyzing thegovernment's economic policy,geared towards bringing quickmoney into the market.

As can be seen in the graph below,Pakistan's population growth rate,according to the Federal Bureau ofStatistics, Planning andDevelopment Division, is1.8 percent and in comparison, the

production of wheat and rice hasgrown 1 percent or less since 2002.With this scale of the problem, theneed is to adopt meaningfulcommensurate strategies.Otherwise, reducing foodinsecurity will run the risk ofbecoming mere tokenism, with onlya few showpiece projects to showfor the effort.

The World Hunger Series report bythe United Nations World FoodProgramme establishes the

relationship between hunger andlearning in shaping economic

growth. Research by the UN in thisreport shows that improvednutrition leads to a moreproductive workforce with higherlevels of talent and skills leading toeconomic development.Nevertheless, it is important torealize that the government,

without the support of the privatesector and citizens, can at best beonly a policy-making authority. Theneed is to address the requirementsof small-scale farmers, byincreasing their access to land and

natural resources. Also, for thecorporate sector, especially thefood, beverage, fertilizers andpharmaceutical sectors, the issue offood insecurity, poverty andhunger can actually serve as anuntapped market. Innovationtechnology usage and a 'pro-poor'approach can increase theirproductivity and sales, whileaccelerating economic growth inthe country, particularly at thebottom of the income pyramid.

The Business Case ofHunger: ExpandingSustainableOpportunitiesLarge firms and their partners canplay an important role inexpanding economic opportunity inmultiple forms.

The emerging Indian retail giant,Reliance, is a working example of asuccessful business model based ontriple bottom line (TBL) valuecreation.

Reliance is tapping into thecountry's own rural agriculturalsupply chain to provide qualityfood for its stores. Reliance hasbuilt an inclusive business modelthat creates a close link with thesupply chain of poor farmers, and itprocures produce directly fromthousands of farmers in villageswithin a 15-kilometre radius of

their collection centres. Reliancetrains farmers to produce goodsaccording to certain standards andrequirements, reduce loss andspoilage and guarantees purchaseof all produce delivered. Access toinformation and fair price hasimproved farmers' yield andreduced wastage.

The polarization of profit and not-for-profit has been much of a

Agriculture

2002-03 2003-04 2004-05 2005-06 2006-07

8

6

4

2

0

Fiscal Years

4.3

2.3

6.5

1.6

5

Agriculture

AgriculturePercentageinRealGDP

180,000,000

160,000,000

140,000,000

120,000,000

100,000,000

80,000,000

60,000,000

40,000,000

20,000,000

0

Population growth over the years

Population

195133,816,000

196142,978,000

197265,321,000

198184,254,000

1998130,580,000

2008167,762,040


15/45

handicap, leading us toconveniently overlook businessopportunities through collaborativeinitiatives. Fortunately, however itis now being better understood byboth the sides that multi-pronged

partnerships create a win-winsituation, for all parties.

The Famous PakistaniExampleThe United Nations DevelopmentProgramme (UNDP) gendersupport initiative known asCommunity Empowermentthrough Livestock Development &Credit (CELDAC) is a primeexample in Pakistan ofcollaboration across Government,

Aid Agency and Corporate sectors.Nestl and Engro Foods, a localPakistani company, serve asimplementation partners in Punjaband Sindh respectively for theCELDAC project.

How and Why It WorksSince farm animals are mostlycared for by women, who often lacktraining in livestock management,together, these two competitorsestablished the country's largest

milk collection network. Incollaboration with the University ofVeterinary Sciences, they havedeveloped a one month, hands-ontraining curriculum andcertification programme on basicanimal health. They have trainedover 800 women, of which 70percent of the graduates areindependent entrepreneursdelivering animal health services intheir villages and have added anadditional Rs. 2,000 - 3,000 to their

family incomes. The increasedcapacity of the human workforcewith the corporate sector'smanagement skills has linked ruraldevelopment in the affectedvillages to market mechanisms,which makes the supply anddemand of milk less volatile and ofgood quality.

The Acumen Fund has also beenworking in developing andunderdeveloped countries to

change the ad-hoc models ofdependence to market-driven,sustainable entrepreneurialapproaches. Their investment in aMicroDrip project for instance iscreating a new market for poor

farmers to leverage technicalinnovation and add to thedevelopment of their region. Theyhave successfully applied theirentrepreneurial fund-basedinvestments to create 'Khuda kiBasti' models that provide housingand infrastructure for the slumdwellers through investment in Mr.Tasneem Siddiqui's socialenterprise, Saiban.

Lessons LearnedMany successful case studies areuseful for us to take lessons from,replicate and improvise to achievedevelopmental objectives. It iscritical that children are provided

food as early as possible becauseundernourishment is mostdamaging at that age.

In order to be sustainable it iscritical that targeted interventionsare made in the area of nutrition byfood and pharmaceuticalcompanies and cycles of goodnutrition are created throughinvolvement of the communities.

The Danone-Grameen partnershipin Bangladesh has developed anetwork of local rural micro dairyfarmers to produce and marketyoghurt in poor communitieswhich is then distributed door to

door by the 'Grameen Ladies'.Another set of companies havecreated small sachets of fortifiedfoods which are within thepurchasing power of the poor.

In a nutshell, creating businessdelivery models that are physicallyand economically accessible;investments that are continuous intheir approach to providingadequate food or means to itsacquisition; and visionary leaderswho recognize that returns come

over a long period, are the key tosustainable development.

The time to act, is now. Or ratherwas yesterday - everyday 900people die of poverty-relatedcauses in Pakistan, according toMr. Siddique Sheikh, Chairpersonof Federation of PakistaniChambers of Commerce andIndustry's Standing Committee onCSR. Everyday that we delay, weare nine hundred lives too late.

about the writer

Fouzia Ishaque works as ProjectManager at Habib Bank Limited (HBL)in HR International & OD. She hasparticipated in crucial change initiativesof the bank. She began her career atan international software companyClarus Technologies, gave it a newbrand identity and strengthenedstrategic alliances. Fouzia holds a BCSin Software Engineering and an MBA in

Finance from SZABIST.

In order to besustainable it is

critical that targeted

interventions are

made in the area of

nutrition by food and

pharmaceutical

companies and

cycles of good

nutrition are createdthrough involvement

of the communities


16/45

liberalspeak

commodity crises:

a liberal capitalist perspective

In 1997, Vietnam, apredominantly agriculturalcountry where 80 percent of the

population is rural, lifted theinternal and external traderestrictions on rice: its main staple.

95 percent of urban households arenet buyers of rice and a North-South divide exists in terms of riceproduction. The incidence ofpoverty in the rural areas,45 percent, is much higher than thatin the urban areas: 10-15 percent.The proportion of income spent onfood items for poor households is63 percent. Real prices rose after theremoval of trade restrictions for allthe households.

However, a recent study linking

household welfare and tradereforms by the World Bank showsthat the trade reforms were "broad-based and pro-poor" (Aylin Isik-Dikmelik 2006). The studyconcluded that the trade reforms

benefited all households whetherthey were net buyers or sellers.Vietnam recorded drastic reductionin poverty incidence followingthese trade reforms.

What path does Pakistan, sharingmany characteristics with Vietnam,need to follow, while struggling toconfront the wheat crisis? Thisforms the sole objective of thisarticle.

In Pakistan, again, primarily an

agricultural economy, economicliberalism has been accepted as the'bible' of all economic decisions.Except in the case of agricultureitself. In manufacturing, weembraced the post-quota world

many years ago. In services such asbanking, telecom, insurance orwholesale trade the free marketrides. In recent years, economicgrowth has been mostly propelledby the services industry, where thefree market forces have beenallowed to work relativelyindependently.

Why we continue to religiouslycontrol the agriculture sector isboth a political and economic

question.

by ali salmanfor tbl


17/45

Market-based EquationDynamicsThe economic equation is fairlysimple, at least in its classical tone.

When the price of any commodityrises, the profit margins ofproducers rise and in an openeconomy, it attracts new producers.In our case - that would mean morefarmers planting wheat.

The entry of new producersincreases the supply. Which in turnultimately brings down the pricesas well as the profit margins. Thus,the market reaches a classicalequilibrium point.

Obviously, this does not work asneatly in the real world. Claiming'market failure' as their excuse, thegovernment intervenes.

Apparently, this state interventionleads to a worse failure, due to 'rentseekers'. The bureaucrats are notsimply trained or well-informed formaking business decisions and theytend to give leeway to cronies.Therefore, mafias and cartelsemerge, which monopolize sources

of production and this leads to aconcentration of wealth.

Equation Policy LagShrunkenEconomic liberalism, argued for inthis article, demands for theremoval of entry and exit barriersfrom trade and argues that given afair chance, the market is a far moreefficient and just mechanism forresource allocation.

Economic Liberalists argue that theremoval of trade restrictions in thewheat market -both internal andexternal- is more beneficial for allthe sections of the economy in thelong run. Particularly because, inthe case of the wheat market -unlike capital intensivedevelopment- the policy lag wouldbe fairly short.

The reason is simple: the farmers,once they get the right price signal,

would cultivate more wheat - and adecision by the farmers to switchtheir cultivation - would normallytake six months to a year. Thus,potentially within a year even, we

will be able to produce more wheat,which will offset the demand.Consequently prices will comedown.

Land Prices ShootHigher StillThe United Nations InternationalFund for Agriculture andDevelopment (IFAD) has reportedthat rising food prices are alreadystimulating a supply response. In

Ghana for example, the corporatesector is reacting quickly, especiallyin the maize sector. In many partsof the developing world this isreflected as an increasing demandfor land, particularly from largescale investors. In Senegal, thedemand is particularly high forirrigated land. In Egypt, both thepurchase and rental prices for landare soaring.

We should expect to have a similarresponse in Pakistan to an increase

in the prices, provided we allow themarket to work.

If the price of the land increases, theowner of the land is likely tobecome wealthier. If the price of aproduct increases, the producer islikely to benefit. Theoretically, ofcourse.

The Real Cause:Inflation or Production

Consider inflation and its effect onthe low-income household budget,a large chunk of which comprisesfood.

In 2006, the Pakistan Institute ofDevelopment Economics (PIDE),run by the government, published a

joint study on Wheat Pricing policy,which was conducted by a teamdrawn from the World Bank andPakistan Agriculture PriceCommission. This study concludedthat: "analysis of price multipliers

indicates that increases in wheatprocurement prices (one means ofpromoting domestic procurement)have relatively small effects onoverall price levels. It also

concluded that market forces playa dominant role in pricedetermination in Pakistan, and thatpolicies that promote the privatesector wheat trade can bothincrease price stability and reducefiscal costs".

Conclusively the study held that"fluctuations in production, ratherthan market manipulation, areplausible explanations for priceincreases in recent years".

The current wheat crisis is drivenby a production shortfall, asconcluded in the PIDE study. Whenwheat is imported to offset theproduction shortfall, we end upsupporting a wheat growersomewhere in Australia or theUnited States. Would it not bebetter to pay our own grower aninternational price? Given that theprice signal is the only effectiveway (in my humble, liberal

opinion) to enhance the productionand hence stabilize the price.

The acuteness of our productionshortfall in the coming crop can begauged from the simple fact thatthe usage of the main input,phosphate, was 50 percent less thanin the previous year. If the growersof wheat are given appropriateprice signals, who wouldknowingly reduce the cultivation ofwheat?

Facades of StateInterventionThe government intervention inpurchasing and storage throughPASCO (Pakistan AgriculturalStorage and Services Corporation)has also taken an nasty turn. Arecent article in Dawn revealed thata staggering 2 million to 4 milliontons are 'missing' from the market.The farmers would not like to becoerced by government

functionaries and they instead tie


18/45

knots with private investors - theinfamous middleman - whopromises to pay them more thanthe market. In practice, that isexactly what is happening. If you

visit an average village in Punjaband talk to a wheat grower, he willreadily tell you how he does notcare about the support price of thegovernment. The market effectivelycontrols the price movements butthe state continues to masqueradeits delusion of control.

As a matter of fact, when thegovernment takes matters, likefixing a quota for flour mills, in itsown hands, the issue of nepotism

and rent seeking surfaces rapidly.How can we trust our governmentofficials to be well-informed,transparent and fair whiledetermining the quota forthousands of flour mills? Insteadwe should admit that the flourprocessing market is a near perfectmarket in the sense that no singleplayer -or a cartel- is in a position toinfluence the market. If we cantrust the 'invisible hand' for amoment, it is highly likely to create

a win-win scenario.

Opponents of the free market in thewheat market erroneously arguethat the benefit of a higher pricewould be largely taken by land

lords and small to medium wheatgrowers would not benefit much.To determine the credibility of sucha statement, we must know thecomposition of ownership ofagriculture farms.

The Pakistan Agriculture Census2000 reports that wheat is grown on75 percent of privately ownedfarms. 94 percent of Pakistan'swheat cultivated area is owned byfarms of less than 25 acres in size,

which suggests that wheat

production, just like the SMEphenomenon in manufacturing, islargely characterized by small tomedium farm owners. In fact only10 percent of farms are equal to or

less than 1 acre, and their produceis only for self-sufficiency and doesnot reach the market.

We argue that the great majority ofthis price hike -to be fair, we meantrade freedom- would belong to therural poor and lower middle class.We now show an estimate of thewheat tradable surplus and itsimplications for our fiscal policy,provided market prices prevail.

The free market principle should,theoretically, come full circle. Oncethe agricultural market is free ofstate intervention, either via statesubsidized inputs or by supportprice, then,, agricultural incomeshould be taxed. If a tax rate of10 percent - like Ushr - is levied,then it is likely to generate taxrevenues close to Rs. 11.70 billion. Ifneed be, it is this wheat generated

income, which should be utilized toprovide the wheat-flour to thepoor, whether urban or rural, in amarket friendly fashion. Even forthis, we argue that privatelymanaged utility stores are a muchbetter option than food coupons orcash grants, which are more likelyto be mismanaged or misused.Studies have shown time and againhow cash grants are alwaysmisused and the food couponsissued in the late nineties proved

ineffective.

Advocating the free marketprinciple in the agricultural marketwith the backdrop of ragingpoverty and endless queues forAtta (wheat flour) indeed sounds

dismal and against egalitarianprinciples. However, who likesgetting an injection or undergoingsurgery?I It is always painful. But,who amongst us would notconsider bearing that temporarypain, which is critical for our ownwell-being in the long-term?

Economic liberalism proposes abitter pill, but believes in it as apanacea for the illnesses of oureconomy. And so it must be

swallowed - and the sooner, thebetter.Wheat Tradable Surplus

Total Production 22,000,000

Kept for Rural 10,098,000Households Consumption

Kept for Seeds 8,000,000

Available for Trade 3,902,000

Sale Price (Per Maund) 1,200

Sale Volume (Rs.) 117,060,000,000

Tax @ 10% 11,706,000,000

about the writer

Ali Salman currently works as asenior partner at DevelopmentPool - a consulting firm - and teachesEconomics. Ali specializes in economicanalysis, entrepreneurship, policyformulation and business models. Hehas worked in the private, public anddevelopment sectors of Pakistan for

over ten years. Besides variouspublications, the book 'AlternativeYouth Policy' is to his credit. Heengaged in good governance reforms,citizens-government liaison and policyresearch during a two-year period atPlanning Commission, Government ofPakistan. Ali did his Masters inEconomics from Boston University; hisMA in Development Studies as RoyalNetherlands Fellow; and an MBA fromQuaid-i-Azam University, Islamabad.


19/45

feed or fuel?

the losing battle: fuel versus food

In the environment of rising oil

prices and issues of climate

change looming large, rich

countries needed to wean

themselves off dependence on

fossil fuels. Biofuels seemed like asure winner - firstly, because

supporting biofuels meant

supporting domestic agricultural

industries. Secondly, because

biofuels were thought to be

greener than fossil fuels since the

amount of greenhouse gases that

are emitted during combustion is

equivalent to the amount it

absorbs in its lifetime. As such,many countries rushed to provide

generous policies to encourage the

production and use of biofuels.

While well intended, these across-

the-board policies have had major

implications on the world's food

supply as our food needs become

increasingly tied to our energy

needs.

Commodity War: Foodor Fuel?Biofuels come from various sources- ethanol from corn, sugar beets orsugarcane, oils from seeds andgrains such as the oil palm,

rapeseed or soybean. Thesefeedstocks can be burned to yieldenergy in our cars and factories.But, more importantly, thesefeedstocks are also sources of foodfor the world. The increaseddemand for biofuel feedstocks inthe western world has led to directcompetition for these commoditiesas food versus fuel.

Additionally, as some crops, suchas corn become more profitable to

grow because of biofuel subsidies,farmers switch to planting themand reduce their plantings of othertypes of crops. This lowers themarket supply of the other cropsand drives up overall prices.

Clay Ogg, an agriculturaleconomist with the U.S.government explains therelationship between US biofuelpolicy and food prices, "Reductionsin U.S. exports of corn and other

crops lead to higher, worldcommodity prices. In the U.S., it iseasy to plant less soybeans and

more corn when the price of corndoubles, as occurred recently. Thisraises the world price of soybeanoil... so we are a major contributorto the increase in vegetable oil andpalm oil prices."

In Europe, sunflower oil andrapeseed oil that were previouslyproduced for consumption are nowbeing used as biofuels to generate"green" energy. Increased demandfor vegetable oils to meet this newenergy need, along with increaseddemand from population growth,continues to drive up prices.

The growth of the biofuel industryhas triggered increases not only inthe prices of corn, oilseeds, and

other grains but also in the prices ofseemingly unrelated crops andproducts. The use of land to growcorn for ethanol is reducing theacreage devoted to other crops.Food processors who use cropssuch as peas and sweet corn havebeen forced to pay higher prices tokeep their supplies secure andthese additional costs areeventually passed on to consumers.The price of livestock and poultryhas also gone up since animal feed,

which is largely grain-based, is nowmore costly.

by jia en teofor tbl


20/45

Fuel-friendly Policiesover Food SecurityA Goldman Sachs report says thatforty-one countries are currentlypursuing policies to promote the useof biofuels over the next decade. Ifimplemented in full, these policieswould increase global biofueldemand from 10 billion gallons peryear in 2005 to 25 billion gallons peryear by 2010, a 20 percentannualized growth rate.

Although this demand comprises arelatively small portion of total cropdemand, about 5.5 percent, thereport adds that biofuel productionwill remain a key driver of strongagriculture demand growth in the

coming years, primarily owing togovernment policies for biofuelusage.

Most of the countries with biofuelproduction and usage policies are inthe northern hemisphere while themost efficient crops for productionare in the southern hemisphere. Forexample, sugarcane, which is themost efficient ethanol crop, growsabundantly in the tropics but not inthe north, while jatropha, the most

efficient non-food biodiesel crop,grows in southern Asia and Africa.Sunflower oil and rapeseed oil,which are grown in the northernhemisphere, are far less efficient asbiofuels. However, rather thanpromote the use of the most efficientfood crops as biofuels, the primarymotivation for these blanket policiesin the western world is typically tosecure the supply of energy andincrease self-sufficiency.

This forces the industry to operateon the availability of feedstock orindigenous food crop rather than bedetermined by the 'natural'economics of the market. As aresult, these policies generate amuch greater strain on resourcesthan would otherwise occur if therewere no barriers to trade.

"Many of these subsidies are poorlycoordinated and targeted," saysSimon Upton, director of the GlobalSubsidies Initiative, regarding such

across-the-board biofuel policies inthe western world. "All indications

are that subsidies are being piled ontop of one another without policymakers having a clear idea of theirpotential impact on the environmentand the economy. Yet the potentialfor waste on a grand scale and some

spectacularly perverseenvironmental outcomes is large."

To highlight Upton's point - underexisting policies, the biofuelsindustry will, in aggregate, receivesupport worth over $92 billionwithin the 2006-2012 time frame.However, the benefits of the policiesare limited. A literature review fromthe Congressional Resource Serviceconcluded that using corn ethanolcuts net greenhouse gas emissionsby only about 20 percent because itrequires heavy use of fertilizers andpesticides, which are energy-intensive and cause water pollution.

Biofuels: Even MoreGreenhouse Gases andStill Not Enough Fuel?Furthermore, even if the entire corncrop in the United States were usedto make ethanol, that fuel wouldreplace only 12 percent of currentU.S. gasoline use.

Recent research published in Sciencemagazine also suggests that whenland-use changes are taken intoaccount, production of corn-basedethanol actually leads to a netincrease in greenhouse gasemissions because farmers arestarting to plant on land that hadpreviously been protected under aland conservation programme.

Similarly, the diversion of cropland

from food to fuel will lead to evenmore grasslands and forests beingcleared to meet both the growingdemand for biofuel and food. Onestudy estimates that, over a thirty-year horizon and taking intoaccount these land-use changes,corn-based ethanol doubles the levelof greenhouse gas emissions relativeto gasoline. In the European Union,similar concerns have prompted ashift in biodiesel policy because itwas found to be contributing to the

destruction of Indonesianrainforests to produce palm oil forbiodiesel.

New Food Prices:Fueling Food InsecurityThe International Food PolicyResearch Institute, in Washington,D.C., has estimated that the increasein global biofuel production willpush global corn prices up by20 percent by 2010 and 41 percentby 2020. The prices of oilseeds,including soybeans, rapeseeds, andsunflower seeds, are projected torise by 26 percent by 2010 and76 percent by 2020, and wheat pricesby 11 percent by 2010 and 3 by 2020.In the poorest parts of sub-SaharanAfrica, Asia, and Latin America,where cassava is a staple, its price isexpected to increase by 33 percentby 2010 and 135 percent by 2020.

What Now?To mitigate these price increases, theright incentives must be put inplace. Instead of promoting moremandates, tax breaks, and subsidiesfor biofuels, governments shouldmake a major commitment tosubstantially increasing energyefficiency in vehicles, homes, andfactories; promoting alternativesources of energy, such as solar andwind power; investing in research to

improve agricultural yields andworking to increase the commercialviability of fuels derived fromcellulose. Until then, high foodprices are likely to be here to stay.

about the writer

Jia En Teo is anonline entrepreneurand writer whocurrently resides in

New York City. Asidefrom her onlineventures, she has

great interest in issues related to socialentrepreneurship, corporatesocial responsibility and theenvironment. She graduated from theUniversity of Michigan with a Bachelorsin Political Science and Economics.


21/45

socialspeak

Pakistan is the world's sixthlargest producer of wheat,according to the Ministry of

Food and Agriculture, with anannual production of over 21million metric tonnes (MT). The USDepartment of Agricultureestimates Pakistan's riceconsumption to be over 2.5 millionMT. With exports of about the samequantity, Pakistan is capable offeeding its own population. Facedwith such positive facts, we allwonder about the exact reasons forthe prevailing wheat crises, whichhas existed in varied degrees forover a year now.

The PakistanGovernment WheatPolicyBefore delving into the crisis, it isimportant to present an overviewof the prevailing Government

wheat policy (also known as FoodSecurity policy).

The Government is obliged underthe constitution of the IslamicRepublic of Pakistan for theprovision of essential food ataffordable prices to the populationthroughout the country (pleasehold back that snicker and eye-roll).

To fulfill this responsibility,provincial governments have setup

food departments for the purchaseand storing of wheat stocks atgovernment silos, which are thenreleased to flourmills so as to keepwheat and wheat flour available atan affordable price throughout theyear.

Procurement and storage of wheatby the Government is necessitateddue to the peculiar nature ofagriculture produce: wheat isharvested once a year during April-

May. Thus, there is a glut of wheatinherent within the system. In thecommodity markets every

cultivator is anxious to sell hisproduce and clear liabilities (suchas fertilizers, seeds) and take anywell-deserved profit back home.

However, arrival of the crop createsdisequilibrium in the marketbenefiting the purchaser who triesto bring the prices down. The

notorious middlemen enter here.Thus the government also entersthe market with an announcedminimum price and ready to buyall the wheat being offered. Thissets a floor price for wheat in thetime of plenty and curtails possibleexploitation of the farmer, thusinfluencing cultivator's decision togrow wheat again, since it isprofitable. Wheat storage is a costlybusiness in terms of theopportunity cost of investment,

storage, fumigation andtransportation charges.

Thus, as months pass, overheads onwheat stocks result in an increase inprices and the private sector bringsits wheat in the market based ontheir comparative holding power.Moreover, the government also setsits own release price for wheat,which only partially offsetsoverhead costs on storage. Thisprice serves as the ceiling price in

the wheat market and privatetraders clear off their stocks beforethis limit is reached. This policy is

in operation with relative successfor the last 25 years except for thetimes when the wheat crop inPakistan has failed.

Why the Crises?Why has there been a crisis in thesupply of wheat and a spike in

prices since last July, when in factPakistan produced wheatcomparable to its requirements andimported 1.8 millions MT of wheatduring December 2007?

Different quarters have givendifferent alibis includingmisrepresentation of crop size byGovernment to boost GDP growthfigures and concurrent permissionto export wheat (700,000 MT wasexported in May-June 2007) whichlater adversely affected marketsentiments causing panic buying bypublic and hoarding by traders.

Another version blames theGovernment for failure in assessingchanges in the local andinternational situation; increasedwheat requirements as poultry feed(due to corn crop failure) rising to1500,000 MT as per estimates ofexperts.

Another postulates that people are

switching to wheat as rice pricessky rocketed due to extensiveexport of the commodity.

world wheat whereaboutsby ahsan ali mangifor tbl


22/45

A fourth proposed reason is theincrease in international wheatprices peaking at an unprecedented$550/MT, according to the ChicagoBoard of Trade.

Unrealistic agriculture-relatedpublic policy also came undercriticism. An increase in the cost ofproduction, due to the doubling offertilizer costs and increasedpetroleum prices, also played a rolein disrupting the tested Governmentwheat policy as purchase prices setby the government did not cover thecost of production, thusincentivising the growers to: eitherretain their crops or try selling themat higher prices to private traders ifpossible.

World WheatWhereaboutsWhile all the above arguments hold,we are still at a loss to explain fullythe current happenings in the localwheat sector.

The world wheat situation hasimproved this year. World netwheat production is estimated to be8 percent higher this year than last

year. Estimated in 2008 by the U.S.Department of Agriculture, at arecord 656 million MT for 2008-09against total consumption of 642million MT world wheat stocksgrew from 110 million MT to 124million. MT. There has been recordproduction in Canada, EU, U.S. andRussia. Australian produce isestimated to double (from 12 to 24million MT) after consecutive cropfailures in the last two years. India,with 76 million MT of home-grownwheat, has made it clear that it willnot import wheat this year.

Apart from Pakistan, which hasannounced its intention to import2.5 million MT of wheat during2008-2009, there is no non-traditional buyer in internationalmarkets for wheat to pump wheatprices up.

All factors point at easing ofinternational wheat prices in thecoming months. Thus, the present

wheat situation in Pakistan is notdue to the global wheat scene as is

oft-attributed by seemingly guiltyquarters.

Current Wheat Situationin Pakistan

The Pakistan Government increasedthe minimum price for procurementof wheat by almost 38 percent in2008. The aim was to offset priceescalations in agricultural inputsand increase returns for thegrowers.

This is the single largest increase theGovernment has initiated in theminimum procurement price ofwheat in the past twenty five years.

Despite reservations shown byseveral growers' organizations,experts are of the opinion thatincrease in the procurement hasbenefited the growers by increasingthe returns on their produce.

However, in light of the prevailingsituation, private traders are buyingwheat at rates much higher thanthose set by the government.Flourmills are finding it difficult tobuy wheat from open markets

immediately after harvestingseason. Field evidence suggests thatbigger growers are also retaining(read: hoarding) their produce in thecriminal hope of better prices in thefuture. The situation is an aberrationto normal market dynamics and it isevidence that the government'sefforts and its policy on wheat arenot effective. The world wheatsituation has negligible bearing, ifany.

This change, where open market

wheat prices do not correspond tothe arrival of new harvests, has beenwitnessed since 2007.

The government picks up 30 percentof the country's total marketablewheat (that is, 50 percent of totalcrop as per APCOMS estimate). For2008-2009 this comes to Rs. 102billion at a fixed purchase price ofRs. 15,630 per MT. Until May 20,2008, total credit received by privatetraders from the banking system for

wheat purchases in only Rs. 210million.

Food Departments of two provinces(Sindh and Punjab) complain ofhoarding of wheat by big farmersand traders who, according to them,until a few years back, could notretain big quantities of wheat even

for a couple of months. This shift inthe market situation points to thefact that new or non-traditionalplayers have entered wheat marketwith huge funds at their disposalwhich they can park for a muchlonger time, for larger gains. Whileit is quite difficult to estimate actualamounts belonging to localinvestors which have left Pakistanbourses since February 2008, it is asubstantive amount (KSE 100 haslost more than 3000 points sincemid- April). With no substantive

increases in the call and timeaccounts of our banking sector, it isquite plausible that this money hasfound better avenues and highreturns in commodities sector (ofwhich wheat is the biggest). Wheat,with its highly inelastic demandmakes it a very suitable target forhighest gains in the shortest timeperiod, especially when thestructural constraint of the wheatcrop size, which is just enough tofulfill the national demands, lacks

any cushion to ward off speculativetrading in wheat.

The bottomline: regulatory bodiesmust shape up and step up.Commodity trading has a very real,direct human element andquestionable business practicesmust be curbed to avoid myopicmonetary gains at the cost of mass-scale manipulation and suffering ofwho it all boils down to: real people.

about the writer

Ahsan Ali Mangi iscurrently DirectorPlanning (Education)at EarthquakeReconstruction andRehabilitationAuthority (ERRA) andformer Director Food,

Sindh. His research interests includecauses of inequality between and withinnations and its impact on human well-being and the political economy of Food.He holds a Bachelors in ElectricalEngineering and a Masters inInternational Development from the UK.


23/45

csr toolkit

the structure of a cross subsidy model:making food aid a reality for corporations

First of all, let's settle onepoint about this model: Eventhough many companies maybe attracted to the idea, itwould remain within therealm of corporatephilanthropy and not CSR forcompanies that are not in thefood business per se.

Brass TacksWhat is the Product?It's an almost ready-to-eat meal thatcan sustain a large number of thepopulation.

It comes in a box, so it can be easilytransported over long distances.It is culturally sensitive so it does

not smell of "western imperialism" -a common problem when food aidis distributed.

Of course, it must be nutritionallyand calorically-sound, and verifiedto be so for its intended'consumers'.

Pricing?In terms of whether it should befree or it should be subsidized, Itend to lean on the side of subsidy,

unless there is such a wide-scalefamine that emergency measuresare needed.

However, the pricing needs to berealistic keeping in view that thepoorest of the poor are oftenworking in subsistence situationswhere they may actually only havebarter options available to them.

DistributionThere are two target areas for this

product:

Those who are living in extremelyfar-flung areas, engaged in someform of subsistence agriculture,exposed to weather shocks and arethus food insecure.

Those living in urban slums whosechildren may be malnourished dueto poverty or neglect.

MarketingA franchise system needs to bedeveloped for 'kiryana'/villagestores or a new brand of store needsto be created in order to distributethe product. This may be tied into asystem of ration cards or lists thathave the backing of grass rootsorganizations. Frankly, this systemof distribution at the last mile willmake or break this model.

The Cross Subsidy ModelMore affluent consumers, forinstance those who are dining outare asked to either donate anamount via collection boxes or theyare charged an amount on theirbills directly through a foundationto which restaurants are signed up.

These amounts are used as acatalyst fund to create involvementof the affluent classes in the model.The money is then used to cross-

subsidize the boxed meal.

Additional Benefit for TheFood OrganisationsWhoever develops this product willfind a ready market in internationalfood NGOs who are always lookingat cost-effective and easy-to-executeproducts for international foodcrises.

Praise be to Allah Who feeds us,and Whose blessings we seek in ourprayers when we reach out to thosein need.

by salman abedinfor tbl

Food aid by United States Agency forInternational Development (USAID) beingsold in the open market. We don't want thisto happen to our efforts.

about the writer

Salman Abedin is currently ExecutiveDirector at Contract Advertising. Hewelcomes input and discussion on themodel briefly inserted for TBLreadership and can be reached [email protected].

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food & beverage report

the role of the food & beverage sector inexpanding economic opportunity

This report by Harvard University JohnKennedy School's CSR Initiative andFSG Social Impact Advisors reveals thatthe food & beverage industry plays aunique role in expanding economicopportunity because of its universality tohuman life and health. The industryoperates at multiple levels of societywhere billions of people grow,transform, and sell food, particularly indeveloping countries where agriculturedominates all other economic sectors.

Harvard University and FSG conducted

telephone interviews with 19 expertsrepresenting large multinational ornational corporations, and carried out areview of relevant reports, studies, andarticles from a range of sources.

The report provides an overview of thebusiness case for engagement inexpanding economic opportunity indeveloping countries. It focuses on themotivation for intervention at global orlocal levels, and outlines key lessons forthe industry in engaging in expandingeconomic opportunity.

written bymarc pfitzer and ramya krishnaswamy


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The Advantage of LargeFirmsBy tackling specific barriers in a fewlocations around the world, largecompanies are demonstrating thatprogress can be made: people canturn their work into incrementalgains in income and improvedstandards of living. Unsurprisingly,companies' interventions reflecttheir own business models and spanagricultural production of rawmaterials, food processing, anddistribution and marketingactivities. By changing theconditions in this "field to mouth"value chain, large companies helpprovide stability and opportunity tothousands of people.

Such changes target the critical pre-conditions to economic opportunity.They create inclusive businessmodels with emphasis on global orlocal markets, build the human andphysical capital of the poor toparticipate effectively in food &beverage value chains, and work toovercome the adverse institutionaland policy factors, among others,that prevent food & beverage valuechains from fulfilling their promise

of value distribution.

Expanding EconomicOpportunityThe role of large firms and of theirpartners in expanding economicopportunity can take a variety offorms. Whether the long-term visionis about developing local markets orglobal supply chains, the differentscenarios all have one thing incommon: they focus on the ability of

poor communities to create andcapture more of the value from theirlabour.

Business Case forEngagement - The Needfor Sustainable Food &Beverage ProductionMajor firms in the industry areconcerned about maintaining accessto quality foodstuffs despitepotential - often man-made -

disruptions to their supply chains.These include population growth

encroaching on agricultural lands,increasing water scarcity andpollution, climate change resultingin increased frequency and severityof droughts and floods, and thespread of infectious diseases

affecting plants, pollinating insects,and human beings. In the context ofdegrading environments, the poorare particularly affected as theypossess fewer resources with whichto react or adapt to changingconditions. Global consumers, inturn, are increasingly willing to paypremiums for safe, organic, andsustainable products that addresstheir health concerns, as well astheir interests in preserving theenvironment and fighting poverty.In this equation, lies the opportunityfor large companies to anticipate theneeds of consumers, improve lives,and mitigate the environmentalfootprint of their industry.

Improving GlobalSupply ChainsFood & beverage companies arenaturally turning their attention tothe state of agricultural supplychains, particularly around crops inhigh demand internationally,

originating from poorer countries,based on highly fragmentedproduction, with farmers strugglingto keep up with rising standards ofproduction in terms of both farmingpractices and product quality. Forexample, crops such as premiumcoffee that can be grown underforest cover rather than throughslash-and-burn practices, and new,biodiversity-friendly native cropsdeveloped as better alternatives toexisting raw materials. Such

initiatives empower farmingcommunities to raise productionstandards while offering differentlevels of guarantee on productuptake. They allow participatingcompanies to count on access tohighly traceable food materials atneeded quality, quantity, and pricelevels, and to be sure that they arenot associated with environmentaldegradation.

Meeting Demand for

Sustainable ProductsTrading companies positioned

between growers and foodmanufacturers are also promotingsustainable agricultural practices.One incentive is to avoiddisintermediation by globalcompanies creating direct linkages

with the poor in order to offer a"responsible" value proposition toconsumers. ECOM, one suchtrading company, is helpinghundreds of coffee producers inHonduras achieve certification forresponsible coffee production andsourcing, resulting in both economicgains and wider quality of lifeimprovements in growercommunities.

In some cases, companies are takingthe responsible or sustainable valueproposition all the way toconsumers to achieve a "valuespremium" that goes beyond qualityor safety guarantees. This includesadditional efforts by lead companiesand partners to gain exclusiveaccess to crops, and to brandproducts on the basis of theirbenefits to communities and tonature.

Developing Local Food

& Beverage MarketsWhile global companies might firstfocus on export-basedopportunities, a number ofcompanies also emphasize efforts tobuild local food & beverage valuechain and are addressing immediateor anticipated constraints togrowing domestic versions of theirbusiness models. Such initiativesmay focus upstream on supplyconditions and food processing orinclude distribution and consumer

marketing. For example, SABMillerand Cargill are focused upstreamwith their initiative in Rajasthan inIndia to improve barley productionand satisfy domestic brewing needs.A key incentive is to raise localstandards sufficiently to lower thecompanies' dependence oninternational supplies of qualitybarley for malt production. Theprogramme is currently working in150 villages spread through threedistricts of Rajasthan.


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Business Strategies forExpanding EconomicOpportunityCollaborative action across sectors isoften necessary, as no company or

partner organization possesses allthe capabilities need to overcome allbarriers.

The research found different levelsof interventions, gien in the tablebelow, which in turn help toovercome a variety of barriers toexpanding economic opportunityalong food & beverage value chains.These barriers include the poor'slack of appropriate skills,technologies, and finance, as well as

their inexperience in designing andgrowing businesses, and lack ofawareness of the economic andbusiness opportunities.

From this perspective, a number ofpatterns emerge: First, initiatives aretruly collaborative: they all mobilizecross-sector partners, particularly toaddress community developmentneeds. Second, interventions forcreating economic opportunity donot come as single thrusts: allinitiatives employ at least two of

these interventions simultaneously.Indeed, creating businesses requiresempowered people and supportiveenvironments.

Key LessonsA fundamental question remains,however, when considering the vastnumber of people living in povertyand the rate at which humanity isconsuming natural resources: howquickly can success stories be scaled

up across regions and industries?

The report offers five ingredientswhich can be considered:

1. The "Must" of CollaborationThe need for parallelinterventions to design and

grow businesses, buildcommunities' assets andcapabilities, and improveenabling environments suggeststhat collaborative approachesare in fact optimal.

2. Patient Capital.The ability of governments andfoundations to provide patientcapital (not seeking competitivemarket returns in the short termor at all), directly or as

providers of credit to localbusinesses, plays a central rolein a number of cases. Thisfunding allows for theprogressive scale-up of businessmodels which may only yieldcompetitive returns toparticipating companies in thelong term. Because the food &beverage sector can addressboth economic developmentand environmental agendas,their initiatives can tap into arange of budgets among public

and private donors.

3. Planning for SustainabilityFirst, economic gains can bemade more sustainable. Second,because the food & beveragesector is so deeply connected tothe state of natural resources,expanding economicopportunity goes hand in handwith environmentalsustainability. These twoagendas are increasingly

interrelated in terms of scaling

up food production andachieving good "values" pricesin international markets.

4. The Choice Between Globaland Local Approaches

There are two distinct ways ofcreating new value for poorcommunities. The first is to raisethe quantity and quality of foodproducts for sale in marketswith high purchasing power.The second is to build localvalue chains within rural andlow-income communitiesthemselves. Especially ifcombined with a uniquebranding strategy around "pro-poor" produce, significant

premiums can be paid via thefirst strategy to poor producers,which can invest the additionalincome in business growth anddiversification. When localmodels are developed, more

jobs might be supported, butonly in the context of localprices and wages which leaveslittle room for incomeredistribution along the valuechain.

5. Designing for Scale andReplication.It is essential that initiativesshould reach vast numbers ofpeople with their asset-andcapacity-building interventions.In replication lies a vitalingredient to create economicopportunity on a vast scale, andone that should resonate withlarge companies' traditionalapproaches to testing whatworks in one market and thensharing the learning on a global

scale.

Four key strategies companies can use to expand economic opportunity.

Written by Pfitzer, Marc and Ramya Krishnaswamy, 2007.The Role of the Food & Beverage Sector in ExpandingEconomic Opportunity. Corporate Social ResponsibilityInitiative Report No. 20.Cambridge, MA: Kennedy School ofGovernment,Harvard University.


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corporate volunteerism

May 14, 2000. A bus load ofvolunteers and myselfhead to the Thar desert.

We set up a relief collection point inIndus Valley School, and plan toparticipate in the distribution of therelief goods. Our leaders in thiscampaign are the RaastaDevelopment Consultants' people.We are met by the staff of theThardeep Rural Developmentprogramme and we attend the fooddistribution. We see some dead

animals on the way.On our return, we set up amultimedia kiosk at the school andhave an expanded collection pointin operation. We make it a point toaccept no cash, only oil tins and'aata' (wheat flour). The people ofKarachi are galvanized through thisword of mouth campaign and thevolunteers at Raasta areencouraged to expand the scope oftheir work to other areas of Sindhand Baluchistan as well.

May 28, 2000. I am on the way toDadu district for another round offood distribution. At this point Istart to wonder about the nature ofthe 'famine' since there has been abumper harvest of wheat in thatarea. We return to Karachi with afeeling that food aid can be adangerous business, because at theend of the day a bag of wheat is acommodity.

June 17, 2000. Onwards to District

Naushki located at the edge ofBaluchistan. We arrive fromPeshawar and set up a camp at agovernment rest house. We startdistribution the next day in the dryheat of the desert, and it is here thatwe actually meet the homelesspeople living in extreme poverty.

The driver of one of the pickupsthat we are using reminds me thatGod is the provider for all, and ourefforts are mostly in vain. He says

to me: "How many meals have youbrought? For how long will thesemeals last?" This makes me realizeth t it i th ff t th t tt d

activity in food distribution iscathartic.

In Naushki, I remember one of theold women in a makeshift campnext to the main road saying thatshe was glad for the famine,because this was the first time shehad left her village. Anydevelopmental theory is thrownout of the window with suchcomments!

Lessons Learnt from this Exercise:It is useless doing this aloneand collaboration is moreeffective. The success of theexercise hinged on the linkagesthat Raasta had with otherNGOs in each of the areas thatwe operated.

It is better to work with thegovernment so that security isprovided at each place.

People would rather give goods

than cash.

Fast Forward to 2006

I have fond memories of the timeswe spent with the Raasta crew in2000, and want to start somethingon a regular basis. The plan is tostart some food distributionexercise with the meat fromQurbani at Eid-ul-Azha. Wedistribute raw meat as a tradition,but it is better if we provide cooked

meat to the poor so they can have adecent meal.

By some coincidence of fate, I get intouch with the Concern forChildren (CFC) NGO, which servesthe Machar colony in Karachi. Weagree to work with them to providemeals to the shrimp peelers, whoare landless immigrants ofBangladeshi descent. They work inappalling conditions and have norecourse to law since they are notcitizens of Pakistan.

January 7, 2007. 9:00 am. Thehaleem is almost ready. It's time toleave the kitchen where the 700 odd

meals were cooked. The CFC teamhas done well to set up adistribution point at their clinic inMachar colony. We quickly getthrough the meals, and don't haveto deploy the plain clothes policemen on duty.

A very satisfying day indeed.

January 12, 2008. We have to decidewhether the situation will allow usto operate in the tension-filled areas

this year, but the clouds clear andwe proceed with the distribution ofour projected number of mealsamid chaos.

There is chaos because the couponshad been distributed a month ago,and the chaos in the city results indelays in the distribution. We takeassistance from the uniformedpolice for this distributi

tbl issue 3 grain drain

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