Asia fears rising poverty, social unrest from soaring food prices
MADRID (AFP) — Soaring food prices could push millions of people in Asia back into poverty and lead to social unrest, regional leaders warned at the Asian Development Bank's annual meeting in Spain.
"The recent hike in the price of rice will hit Asian countries particularly hard. The ones who are most affected are the poorest segment of the population including the urban poor," Japanese Finance Minister Fukushiro Nukaga said Sunday.
"It will have a negative impact on the living standards and also affect their nutrition. Such a situation may lead to social untrust and unrest and therefore safety nets addressing the immediate needs of the poorest are needed," he added.
Prices for the benchmark Thai variety of rice, a food stable across much of Asia, are at about 1,000 dollars a tonne, up threefold from the last ADB annual meeting held in Japan one year ago.
Meat prices have risen by 60 percent in Bangladesh in the year ending in March, and by 45 percent in Cambodia and 30 percent in the Philippines, according to a report issued Saturday by the ADB.
The rise in global food prices has sparked riots last month in Egypt and Haiti, protests in other countries and restrictions on food exports in Brazil, Vietnam, India and Egypt.
Indian Finance Secretary Subba Rao said a 20 percent rise in food prices could force 100 million people into extreme poverty.
"In many countries, including in Asia, that will mean the undoing of gains in poverty reduction achieved during the past years of growth," he said.
The Indian government, which is facing a general election by May 2009, has implemented a raft of measures, such as banning the export of staple foods like rice and lentils and cutting customs duties on other items, to try to ease price pressures.
It spends the equivalent of about 2.0 percent of gross domestic product per year on subsidies for food, fertilizer and energy to help offset the impact of rising prices on the poor, Rao said.
But Nukaga warned that export restrictions lead to higher prices while food subsidies to help the poor deal with surging prices could place a tremendous burden on state budgets.
"Export restrictions will not only distort the proper functioning of markets in price formation but further exacerbate the price hikes in international markets," he said.
"Subsidies that are intended to keep food prices under control have the risk of becoming a significant burden to budgets and are not sustainable over time," he added.
Food subsidies in Bangladesh, one of the poorest nations in Asia, are estimated to double in the current fiscal year and reach over 1.5 billion dollars (973 million euros) in the current fiscal year.
The ADB estimates one billion people in Asia are seriously affected by soaring food prices.
It announced Saturday on the opening day of its four-day annual meeting in Madrid that it would provide a sizeable amount in soft loans to help Asian countries subsidise the price of food staples for the poor.
It will also provide two billion dollars in 2008 and 2009 in loans to finance agriculture infrastructure projects such as irrigation systems and rural roads aimed at boosting farm output in the region.
Rising use of biofuels, trade restrictions, increased demand from Asia to serve changing diets, poor harvests and increasing transport costs have all been blamed for the price rise.
