/ 3 May 2008

ADB demands action on food inflation

The Asian Development Bank called on Saturday for immediate action from global governments to combat soaring food prices and pledged fresh financial aid to help feed the Asia Pacific region’s poorest nations.

”The food crisis calls for immediate response of governments and the international community,” the ADB concluded in a 15-page report detailing its planned response to soaring global food prices that have jumped 43% in the year until March.

”The ADB’s short term response will include targeted interventions to protect the food entitlements of the most vulnerable groups and income and livelihood programmes for the poor to mitigate the immediate impacts of the crisis,” the report said.

”ADB will also consider budget support to hardest-hit countries to alleviate the fiscal pressures and assist imports of food grains and agricultural inputs,” said the report, which gave no detail or figures on the size of the support programme.

ADB president Haruhiko Kuroda told a news conference in Madrid, where the bank is holding its four-day annual meeting, that total lending ”could be sizeable, but not enormous” and would depend on the scale of requests it received for help.

”We are getting in touch with potential recipients of this kind of assistance and we will soon come up with appropriate figures,” Kuroda said, citing Bangladesh and Tajikistan as being among several countries that appear to be seriously affected by rising food prices.

International action

The ADB’s call came as ministers from South-east Asian nations agreed at a meeting in Indonesia to cooperate to tackle rice prices that have almost tripled this year and as the African Development Bank (AfDB) pledged to add $1-billion to its loan programme to address the food crisis in African countries.

The Asia-Pacific region is home to two thirds of the world’s poor with 1,5-billion people — three times the population of Europe — living on less than $2 a day.

Rice is a staple food in most Asian nations and any shortage could lead to unrest and instability, governments are extremely sensitive to its price.

The five mainland South-east Asian nations produce a combined 60-million tonnes of milled rice each year, about 14% of world output. But only Thailand, the world’s number one rice exporter, and Vietnam have major surpluses.

Countries including India, Vietnam, Indonesia and Brazil have imposed curbs on food exports in a bid to secure domestic supplies and limit inflation.

The ADB report blamed such market interventions for increasing price volatility, arguing that they had reduced current supply and increased uncertainty about future supplies.

Global food prices, based on United Nations records, rose 35% in the year to the end of January, markedly accelerating an upturn that began, gently at first, in 2002. Since then, prices have risen 65%.

Waves of discontent have been felt. Violent protests hit Cameroon and Burkina Faso in February. Protesters rallied in Indonesia recently and media reported deaths by starvation. In the Philippines, fast-food chains were urged to cut rice portions to counter a surge in prices.

John Bruton, the European Union’s Ambassador to the United States, predicts that the world faces 10 to 15 years of steep rises in food costs. And it is the poor in Africa and, increasingly, South-east Asia, who will be most vulnerable.

The food crisis has donor countries scrambling to help the United Nations’ World Food Programme fill a funding gap of $755-million and keep aid donations on track this year.

The United States has already released aid from a crop trust and this week announced $770-million in new food aid and farm development funds for next year.

The Manila-based ADB is holding its annual meeting in Spain, one of 67 countries — 48 from the Asia-Pacific region, 19 from elsewhere — that fund the institution’s programme of low interest loans and other support to fight poverty in Asia.

Donor nations on Friday pledged $11,3-billion for the four years 2009 to 2012 to replenish the multi-lateral body’s key poverty alleviation fund for Asia’s poorest countries, a 60% increase from the 2005 to 2008 level.

The ADB approved a total of $10,1-billion in low-cost loans in 2007 for projects and technical assistance in poorer countries. Pakistan was the largest borrower, followed by Vietnam, India, China and Indonesia. – Reuters