CHAPTER 1

The aim of this study is to see those factors which affect the prices of farm foods product. For this purpose several different variables have been taken as under consideration which may affect the farm food products. From those factors livestock has been taken as the dependent variable. In order to find out the result technique has been run on the collected data to see that which factor has the significant impact on the farm food products.

Problem Statement:

The problem area or issue regarding the impact of inflation on farm food products are mainly the underdeveloped countries. Some of the critical factors which comes under noticed is that in underdeveloped country inflation is itself a very big problem and for those countries its very difficult to get rid of the inflation and it itself is a big stress for the government to control over it which causes the failure of development of the country.

On the basis of empirical evidence research problem is being developed “ the impact of inflation on the rising farm food prices”. Economic growth depends on the conditions of the inflation of the country.

1.3 Research Hypotheses:

This study focused to identify the factor affecting the rise of farm food products. It is recognized in literature review that inflation has the potential affects on the rising of farm food products.

Therefore after a comprehensive study on the factors affecting the farm food products. Finally study comprises of the following hypotheses:

H1: Inflation has the significant impact on the farm food prices.

H2: Population growth has the significant impact on the farm food prices.

H3: Per capita income has the significant impact on the farm food prices.

1.4 Outline of the Study:

The aim of this study is to understand the basic concept of those factors which affect in rising of the prices of the farm food products. This study focused to investigate that whether the inflation has severe role in affecting the prices of farm food product. Theoretical framework represents the impact of these factors on the farm food products. Study found that the critical factors affect on the farm food products includes: inflation, population and per capita income respectively by evaluating research hypotheses.

1.5 Definitions:

(i) Livestock:

Farm animals, with the exception of poultry. In Western countries the category encompasses primarily cattle, sheep, pigs, goats, horses, donkeys, and mules; other animals (e.g., buffalo, oxen, or camels) may predominate in other areas. See also ass, cow, dairy farming.

Livestock (also cattle) refers to one or more domesticated animals raised in an agricultural setting to produce commodities such as food or fiber, or labor. The term “livestock” as used in this article does not include poultry or farmed fish; however the inclusion of these, especially poultry, within the meaning of “livestock” is common.

(ii) History of Live Stock:

Animal-rearing has its origins in the transition of cultures to settled farming communities rather than hunter-gatherer lifestyles. Animals are ‘domesticated’ when their breeding and living conditions are controlled by humans. Over time, the collective behaviour, life cycle, and physiology of livestock have changed radically. Many modern farm animals are unsuited to life in the wild. Dogs were domesticated in East Asia about 15,000 years ago, Goats and sheep were domesticated around 8000 BCE in Asia. Swine or pigs were domesticated by 7000 BCE in the Middle East and China. The earliest evidence of horse domestication dates to around 4000 BCE.

Older English sources, such as the King James Version of the Bible, refer to livestock in general as “cattle”, as opposed to the word “deer”, which then was used for wild animals which were not owned. The word cattle is derived from Middle English chatel, which meant all kinds of movable personal property, including of course livestock, which was differentiated from non-movable real-estate.

(iii) Inflation:

Inflation is a key indicator of a country and provides important insight on the state of the economy and the sound macroeconomic policies that govern it. A stable inflation not only gives a nurturing environment for economic growth, but also uplifts the poor and fixed income citizens who are the most vulnerable in society. Over the last decade, with a few exceptions, inflation around the world had been at a retreat. However, with buoyant global growth, along with higher population growth, rapid industrialization and urbanization in emerging markets, and strong per capita income growth, inflation has started veering its ugly head in many parts of the world, including Pakistan. In the midst of soaring demand for essential commodities, food inflation has emerged as the main contributor to recent global inflationary pressures.

(iv) Per Capita Income:

Per capita income is how much each individual receives, in monetary terms, of the yearly income generated in the country. This is what each citizen is to receive if the yearly national income is divided equally among everyone. Per capita income is usually reported in units of currency per year. When comparing nations per capita income reflects gross national product per person, but it is also used to compare municipalities within nations. When determining the per capita income of a community, the total personal income is divided by the population.

(v) Population:

Population growth increased significantly as the Industrial Revolution gathered pace from 1700 onwards. The last 50 years have seen a yet more rapid increase in the rate of population growth due to medical advances and substantial increases in agricultural productivity, particularly beginning in the 1960s, made by the Green Revolution. Pakistan is always facing the problem of population. The increased population increases the problems of Pakistan as the birth rate of Pakistan rises it also give rise to the basic problems of employment, inflation and basic necessities which becomes difficult to solve. The rising population always gives rising problem because of the limited resources available in the country.

CHAPTER 2

LITERATURE REVIEW

Food is now not a cheaper item as it was in previous time .overall worldwide prices for wheat, rice and other food items have grows up .Starvation as food shortage loom and crop prices spiral are facing by million of world’s vulnerable people .Million of people worldwide are pushed below the poverty line due to the rising in food prices. UN Food and Agriculture Organization (FAO) has warned that growing up prices have trigged a food crises in 36 countries and it never happen before ,the effect is spreading from poor and prospering , developing countries to the developed countries. Large retailers in the USA start rationing sales or rice in result of bulk purchases by customers ware by rocketing prices of staple foods. Further, in 35 years globally food reserves are at their lowest, so prices are stay up for the foreseeable future .food crises are facing by overall the world currently, which make to threatens worldwide instability.

2.1 Magnitude of Problem:

To point out the hunger children marched in Yemen, many farmers protested outside Dewing Street in London. Thailand army has been alerts and for the looting of food from the ware house and even fields, Pakistan army is also alert for prevent. USA one of the highly developed countries eggs grows up by 24 per cant; in Chile, ground beef grows up by 8 per cent; rice grows up by 40 per cent in Sierra Leone; pasta grows up by 14 per cent in Italy; bread grows up by 10 per cent in Australia. Pakistan, Thailand , India and else where in past years rice prices has doubled, a hike that hurts all the more because half of the weekly budget is mostly spend on food of Asian families.

2.2 Causes of Global Food Crises:

Food crises are not the first time witnessed by worldwide economy, but past phases were not accompanied by such frequent growing in food prices. To suggest any policy measures it is important to study all those factors first. In contributing the prices (Ghost, 2008) the prices of soaring oil has been the major factor, which in many ways affects agricultural costs directly and indirectly. This is because, in the cultivation process itself as well as in transporting food, raised significance of energy as in input. Both the cost of production and cost of transport are pushing up in result. The diversion of food crops (maize in particular) for making biofuels is another cause for the price rise.

Expert argued about the global food crises stems from the raising demand of foods and unprecedented worldwide population growth. In 2007, according to FAO, with record grains harvest, every person in the world can feed at least 1.5 times more then present demand, there is more enough food in the world. “Climate change” is one of the major responsible factors. Food production is have reduced by floods, erratic harvests and droughts.

It’s difficult to evaluate the speculation to the increasing in food prices. In the worldwide food crises the other responsible factor for recent jump is market speculation. From USA, World wide traded wheat, corn and small quantity of rice come, food grain which is most traded prices in dollars. The cost of imported food rises because the dollar slides against the other currencies.

2.3 International Initiatives to Control Food Crises:

In global crises growing up food prices have developed. Food crises the solutions to solve its problem, international community is working for it. Low income countries hit by high food prices which are helped by International Monetary Fund (IMF) while providing financial assistance to few of the worst affected countries ,appropriate policy action were taken by them (IMF, 2008).

2.4 Action Needed to Solve the Problem of Food Crises:

For the global crises it’s not easy to sort out solution, since there are numerous causes by dramatic food prices escalation. World leader have to act urgently because of this global disaster. For the immediate crises one solution is to establish a global fund for the UN’s FAQ, in hard time, accessed by net food importing countries contribution inhale to be by all nation. Further, there should be increment in food production. Within poorer countries, without any alternatives increment should be in the production of food grains. For global food crises another variable for solution is management of natural resources. For agricultural production very important input is oil, for managing the problem of food crises it’s also a critical issue to manage the oil prices. For this auto maker should encourage by Government to bring in hybrid cars, build more gas station and encourage the use of gas powered vehicle. It’s important that use of oil should be reduce and try to develop alternate sources of energy.

When all people have physical and economic access to sufficient at all time, food security exists, for an active and healthy life safe and nutritious food. Unlike nutrition, where based on human nutritional requirements with standard protocols treatment is guided. For achieving food security there are many challenges: food security increased and natural resources are not further degrading, population growth will cope up, growing inflation and income, change in food habits, into biofuels conversion of food crops, in urbanization and commodity market speculation is increased. Stepping up research should be including by agenda, productivity of rice should be growing up, seed cotton and wheat, and water purification in low cost is developing.

As a short term response to the vulnerable people food availability has to increase by taking immediate steps by international community. Farmer is allowed to make increment in their income, output and productivity. Without penalizing consumes increasing exports and high degree is attaining – support through price – market is distorted. Since the civil war in the United States a chain of events that culminated in the largest inflation of food price, started in motion by the 1970 corn blight. This inflation was the changes in the prices of food grains, and feed and lives stock products

2.5 Back Ground and Policy to 1973:

Beginning about 1971 it is useful to highlight deeply the unfolding events. How government policy in the food price portion become growing a rearguard action is illustrated and with the feedback dynamics of the lives stock sector is consistent. 7.6% rose up in the food component of the consumer price index, during the first half of 1971. Increased soya bean exports, and corn blight result in, feed cost growing up, on production of livestock depressing effect have – entered the liquidation phase of the hog cycle producers is falling as pork producer. To expand grain exports is the government initiated major efforts, which is based on the assessment.

2.6 Food Price Inflation:

Since the civil war by December 1972, for the largest six-month meat price inflation the stage was the set. By the 1971 recession, the economy cope up with it, pull the combination of strong demand and in 1973 very frequently growth in feed costs make to an round of meat price increases. The dollar value is highly affected by pressure increasing pressure, second significant devaluation is started. To the executive office from the USDA, Control of food policy is moved. Undertaken the all parts of supply augmenting polices, few month earlier, set1973 grain program was reversal, within the administration by much internal conflict was accompanied, to supply expansion from demand expansion, emphasis by the shift in. Inflation and food prices, in both directions their relationship works.

2.7 How the Agricultural Economy Works:

With major policy responsibility and great professional emanate from persons relating to food prices numerous wrong decisions and in correct statements. Ministers of finance and economic advisers perceived less economics of agriculture and the economics of agriculture. There is little contribution in public’s education by agricultural economists and except in unusual for agricultural economist’s subject times agricultural economists have found no eager audience. In poor and rich both countries in aggregate for food the extremely low price elasticity of demand side is the final element.

2.8 Asset Fixity:

Resources are likely to remain where once agricultural supply committed to Agricultural production. Even thought may be quite less for increased periods and returns to them vary widely.

2.9 Competitive Structure: