Asia set food price challenge
By Marwaan Macan-Markar
BANGKOK - An annual meeting of Asian finance ministers and central bank
governors in Hanoi is set to address the fate of 64 million people in the
region on the brink of extreme poverty. They are the worst affected by soaring
food prices, which have hit record highs in the first two months of this year.
"The issue of food price inflation and food security will indeed be one of the
key topics of discussion at the Asian Development Bank's 44th annual meeting,"
says Xianbin Yao, director general of the regional and sustainable development
department at the
Manila-based international financial institution. "[We hope] to focus our
discussions on the long-term structural adjustments that are needed to secure
"If left unchecked, the food crisis will badly undermine the recent gains in
poverty reduction made in Asia," he said in an interview to IPS. "We estimate
that a 10% rise in domestic food prices in developing Asia could push an
additional 64 million people into poverty, based on the US$1.25 a day poverty
In a report released ahead of the annual meeting in the Vietnamese capital to
be held on May 3-6, the Asian Development Bank (ADB) warned that this ascent of
prices among many Asian food staples is "likely to continue" a threat to the
continent's nearly two billion people who live on less than $2 a day.
The region is home to two-thirds of the world's poor, some 600 million people,
who live on less than $1.25 a day. That number stemmed from the rise of those
living in absolute poverty before 2008, when it was 555 million people. The
2008 global financial crisis and the food crisis of that year combined to
undermine the food security of Asia's most vulnerable.
The rising food prices since mid-2010 hit the region that is home to 3.3
billion of the world's population because poor families in developing Asia
spend over 60% of their income on food, reveals the ADB report, "Global Food
Price Inflation and developing Asia". In developed countries, by contrast,
families spend about 10% of their income on food.
While the soaring price of rice was the root to the 2008 food crisis, this time
around it is a different basket of commodities, including cereals like wheat
and corn, dairy, meat, oils and fats and sugar. Countries such as Indonesia
have had to grapple with a rise in chili prices, China has seen the price of
garlic double, India endured price rises in onions, and South Korea faced
similar price inflation for cabbage, an important ingredient for kimchi, the
country's best known national dish.
The consumers most affected have been "net buyers of food, who are pretty much
all urban consumers, especially the urban poor," says Purushottam Mudbhary,
coordinator of the economic, social and policy assistance group at the Asian
regional office of the Food and Agriculture Organization (FAO), the UN's
Rome-based food agency. "But more importantly, it also includes rural landless
workers and small farmers."
The current rise in the price of crude oil, which hit a 31-month high in March,
has been one among a range of factors that has combined towards this upward
spiral of Asian food, since diesel is needed for pumps in the irrigation
systems, and the extensive use of fertilizer depends on petrochemicals. High
fuel costs have also added to the pre- and post-harvest transport costs.
FAO research has further singled out extreme weather over the past year,
ranging from the summer drought that swept through the wheat fields of Russia
and Central Asia, the winter drought in China and the floods in Australia.
The global race to produce bio-fuel from sugar cane and palm oil has also left
its mark on the food supply chain, Mudbhary said in an interview. "There is a
competition for bio-fuel crops and food crops in Malaysia, Thailand and
For its part, the ADB identified the "structural and cyclical factors that were
at play during the 2007 and 2008 crisis" to have played a part this time, too,
including "rising demand for food from more populous and wealthier developing
countries", shrinking available agricultural land and stagnant or declining
"It is important for policy makers in the region to focus attention on
strengthening the entire food systems from farm production, processing, retail
and distribution to consumption," says the bank's Yao. "A major concern is
efficiency of using scarce resources such as land, water and energy
particularly in large countries such as China and India."
But some of the ADB's critics are far from impressed at other measures the
international lender has identified as pivotal to help the region overcome the
emerging food crisis, ranging from a need to increase investments in
agriculture infrastructure and stronger market integration plans to long-term
research through international and national agriculture centers.
"The bank itself must evaluate its operations in agriculture and natural
resources in general and in wealthier countries in particular," says Avilash
Raoul, executive director of the NGO Forum on ADB, a Manila-based umbrella
group of non-governmental organizations (NGOs) that monitor the bank. "Does ADB
have a comprehensive strategy, let alone a policy, on agriculture which can
guide its operation to addressing the food crisis in Asia? It doesn't have.
"Substantial numbers of the poor and the vulnerable impacted by food price
inflation are located in areas of rain-fed agriculture having difficulty access
to irrigation," he said in an interview. "NGO Forum is demanding a coherent
agriculture policy that should be immediately developed with the participation
by a large number of farmers, especially by small farmers in the most