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Surge in food prices may undo gains of a decade

May 05, 2008

MADRID, May 4: Soaring food prices may throw millions of people back into poverty in Asia and undo gains of a decade, regional leaders said on Sunday while calling for increased agricultural production to meet rising demand.

Asia --- home to two thirds of the world’s poor --- faces growing social unrest as a doubling of wheat and rice prices in the last year has hurt people spending more than half their income on food, Japanese Finance Minister Fukushiro Nukaga said during the Asian Development Bank’s annual meeting.

If food prices rise 20 per cent, 100 million poor people across Asia could be forced back into extreme poverty, warned Indian Finance Secretary D. Subba Rao. “In many countries that will mean the undoing of gains in poverty reduction achieved in the past decade of growth,” Rao told the ADB’s meeting in Madrid.

A 43 per cent rise in global food prices in the year to March sparked violent protests in Cameroon and Burkina Faso as well as rallies in Indonesia following reports of starvation deaths.

Many governments have introduced food subsidies or export restrictions to counter rising costs, but they have only exacerbated price rises on global markets, Nukaga said. “Those hardest hit are the poorest segments of the population, especially the urban poor,” he told delegates.

“It will have a negative impact on their living standards and their nutrition, a situation that may lead to social unrest and distrust,” he added.

The ADB estimates the very poorest people in the Asia Pacific region spend 60 per cent of their income on food and a further 15 per cent on fuel --- the key basic commodities of life which have seen their prices rise relentlessly in the last year.

Japan is one of 67 ADB member economies gathered in Spain to discuss measures to counter severe weather and rising demand that have ended decades of cheap food in developing nations.The Asia-Pacific has three times the population of Europe --- around 1.5 billion people --- living on less than $2 a day.

Rice is a staple food in most Asian nations and any shortage threatens instability, making governments extremely sensitive to its price.

High inflation, driven by food and raw material costs, has topped the agenda of the ADB’s annual meeting.

The bank on Saturday called for immediate action from global governments to combat soaring food prices and twinned it with a pledge of fresh financial aid to help feed the Asia Pacific region’s poorest nations.