Wrong response aggravates Asia food crisis: ADB

Manila, May 9:

Asia’s response to tightening global grain supplies has aggravated food price inflation and uncertainty, according to an Asian Development Bank (ADB) report released here today.

Export bans and price floors imposed by grain exporters including China, Pakistan, Vietnam and India ‘have increased price volatility and uncertainty in the international rice markets’, reducing supplies.

These have been “contributing significantly to the surge in rice price especially since the end of 2007,” the Manila-based lender said.

Among the importers, “precautionary demand for food stocks in many countries is contributing

to food grain price increases,” stated the report, which cited ‘sustained procurements’ in international markets by Bangladesh and the Philippines. The report, ‘Soaring Food Prices: Response to the Crisis’, stated ‘strong political and economic factors’ were at play in the food policies of most developing Asian countries, ‘so that the effect of sharply higher international prices has not been fully transmitted to domestic prices’.

The bank said crackdowns by Dhaka and Manila on private traders accused of hoarding food grains were ‘difficult to implement’ and have in fact ‘increased prices in the domestic market of many countries’. The report also stated the ‘lack of efficient logistics systems and infrastructure for food grain marketing and distribution’ has ‘tightened the market further’ in Afghanistan, Bangladesh, Nepal, the Philippines, and Tajikistan.

The bank announced at its annual meeting in Madrid earlier this week that it will provide $500 million in immediate assistance to member nations hit hardest by soaring food prices. Longer term, the report urged Asian countries to correct ‘distortions arising from interventionist price and trade policies’, increased investments in irrigation, related farm infrastructure and research, and upgrade of drying and storage facilities to cut post-harvest losses of up to 30 per cent. It also called for improved farmer and rural poor access to credit. The ADB estimates that the soaring food prices could affect a billion people in Asia, home to two-thirds of the world’s poor and where spending on food accounts for 60 per cent of total average expenditure.

Bank president Haruhiko Kuroda has also warned that the food problem could cut into decades

of economic gains in the Asia-Pacific region.