English / ქართული / русский /

Journal number 4 ∘ Zurab Garakanidze
About the need to calculate the Agflation rate during a pandemic

DOI: 10.36172/EKONOMISTI.2020.XVI.04.Garakanidze


Food crises are a natural process for the entire biosphere, as well as for the humanity living in it. Periods of famine and subsequent crises (political and social) throughout history are quite common. The development of global governance institutions and the understanding of the complexity and importance of food security problems for the world population have contributed to the development of the concept of "food security" and its widespread use. The start of these processes, in turn, was stimulated by a series of grain crises that took place in the 1970s. These processes have exposed the gap between the level of food supply in developed countries and the so-called. Among the "Third World" countries. To overcome these difficulties, the Food and Agriculture Organization of the United Nations (FAO) developed the Global Concept of Food Security in 1974. It was presented at the FAO Food Conference in Rome. According to this document, or the FAO, food security is the ability of a person to have enough safe and quality food to live a healthy life.

The following paradox has been observed since the beginning of this century: thanks to advanced technologies, the yield of basic food crops has increased, while dependence on climate fluctuations has decreased. At the same time, there was a sharp rise in prices in the world food markets during the crisis years.

Interest in inflation usually increases during socio-economic crises - it is the result of a sharp increase in demand for products, or a decrease in supply and the resulting increase in prices. Such an event is the "Covid 19" pandemic, which causes closure of borders, suspension of businesses, unemployment, etc. The result is a reduction in supply and therefore - an increase in prices.

Economic security researchers see the "hunger riot" caused by rising food prices during food crises as the most dangerous form of protest. Such protests are usually have an anti-government nature and may be frustrated by the steps taken by the government to overcome the crisis. In addition, when talking about future food crises, we must take into account the fact that the cause of tension is not only the amount of food consumed per capita, but also the quality of food available to the average inhabitant of the earth. The World Bank has set up a special unit, the Food Riot Radar, to monitor world-wide insurgency. According to the organization, from 2007 to 2014, there were 110 "hungry riots" in the world. Therefore, it is important to constantly monitor the price of food, which should be the task not of the government economic team in general, but of the Geostat – country’s official statistics agency in particular.

People living in poverty have nothing to do with the traditional rate of inflation - the average price level determined by the Consumer Price Index (CPI). The dynamics of food prices, i.e. Food Inflation - Agflation, is more important for the general population. Separating this indicator from the CPI will be of great importance for Georgia in the modern global pandemic and its aftermath, when the problem of food security will become more acute.

Currently, the Department of Policy and Analysis of the Ministry of Environment and Agriculture calls for food price tables on a daily basis from the regional offices of the National Food Agency. The information provided by the regional offices of the National Food Agency, most operatively - virtually daily, gives us a complete picture of the situation in any municipality, allowing the Government to identify the most vulnerable regions and apply for budget subsidies or involve more local farmers in state programs. In order to unify information on prices and consumption volumes from the regions, the IT service of the Ministry, should develop a unified computer program in Excel, in which the above formula will be built with the basic indicators at the beginning of the pandemic, and the regional employee of the National Food Agency will enter only current data. Excel will instantly calculate and show the food inflation rate and its dynamics in a given municipality from the beginning of the pandemic to the current day.