Tuesday, April 22, 2008

Era of cheap food over

The era of cheap food is over, an Asian Development Bank (ADB) official said Tuesday.Rajat Nag, the ADB's managing director general, said a variety of factors have contributed to soaring food prices which, even if they ease, will not return to the lower levels which the world became used to.
"We just have to accept the era of cheap food is over," Nag said. The ADB last week said soaring food prices have hampered Asia's fight against poverty and some countries may need foreign aid to feed their hungry millions.
"I don't think we are talking in any way about a famine situation. The supplies are not where we need them and that is a distribution problem. They are not available where the demands are," Nag said.
Global rice demand rose 0.9 percent last year, more than the production increase of 0.7 percent, he said.While Asia's stock of rice is its lowest in decades, the ADB believes it is still enough to meet demand, Nag said."
So we do want to temper what sometimes may appear to me is a bit of an over-reaction." Moves by some countries such as Vietnam and India to curb rice exports to ease domestic prices will likely not work in the longer term, Nag said.
"We believe it would be unproductive, counter-productive, to depend on price controls or trade measures to deal with the immediate crisis," he said.
He said controls were understandable from a domestic standpoint but such measures are "really no different from hoarding at a national level." The Manila-based ADB aims to reduce global poverty.
Nag cited a variety of factors for rising food prices. These include escalating prices of oil and other production costs, conversion of arable land to urban development and biofuel production, and environmental problems such as drought in Australia.In a report early this month the ADB cautioned that the biggest risk for the region was soaring inflation, which it foresees rising to 5.1 percent this year -- the highest in a decade.
Rice prices have roughly doubled in five years, it said.Set up in 1966, the ADB provides development aid to dozens of Asian and Pacific countries, where it says nearly 1.9 billion people still live on two US dollars a day or less. -- AFP

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