Food Price Volatility: Causes & Challenges

Abstract

After independence of INDIA, PAKISTAN & BANGLADESH, minimum wage in 1947, was at par and corresponding exchange rate was also at par with that of US Dollar. Countries, simultaneously, created with all kinds of similarities, after 65 years, exhibit large variations in monetary considerations and exchange rate in India at Rs.62.40/US$, in Bangladesh exchange rate at BDT 78/US$ and in Pakistan exchange rate at Rs.108/US$. Neighbours use trade policy and raise minimum wage to insulate their domestic food price. Natural conclusion is that rise in ratio of minimum wage drags exchange rate with respect to that of trading partners. This behaviour raises volatility of food price across neighbours. Because insulation policy exports volatility elsewhere. Comparison between peer States becomes easier and may not require any empirical test proof for natural conclusions. This paper emphasises synchronising, across neighbours & globally, up-rating minimum wage to contain food price volatility.