ADB warns against another food shortage in Asia
16/9/2008 18:04
Developing Asian countries must implement structural reforms that support
the agricultural sector or else face another dramatic rise in food prices, the
Asian Development Bank (ADB) said today.
In the Asian Development Outlook
2008 Update, ADB said that even though the price of food staples, like rice,
have fallen to more sustainable levels in recent months, the crisis is not yet
over.
"Demand for food continues to outstrip supply," ADB chief economist
Ifzal Ali said in a press release.
"Asia is just one supply shock away from
another grain price spike," he added.
The price of rice rose from below
US$400 a ton at the start of the year to US$1,200 a ton in May, before falling
to US$730 a ton last week. Although there were many drivers of this year's
global food crisis, chronic supply issues remain the most significant force
pushing prices higher, ADB said.
Over the past decade, population and income
growth have far outpaced productivity growth as measured by rice yields per
hectare, it added.
In its latest report, ADB said that this is a direct
result of declining public investment in the infrastructure, institutions, and
innovations that underpin agricultural productivity growth.
"Governments have
to invest in public goods that support agricultural productivity growth and
allow clear market price signals to pass through to producers and consumers
alike. Only a robust supply response by Asia's farmers can bring down prices to
comfortable levels again," Ali said.
ADB said that food prices will not
return to the levels seen prior to 2008, at least for the foreseeable
future.
Even if governments begin to invest in the agricultural sector, it
will still take several years of good harvests to rebuild dwindling global grain
stocks, said the Manila-based development bank.
"To do this, the prices that
farmers receive for their produce must stay high, particularly since input costs
have risen with oil prices. Fertilizer prices, for example, have soared and
transport and other fuel-related costs for farm machinery are also up," said the
economist.
"The world has seen a reversal of patterns, with declines in real
food prices over the last three decades and the prospect of high food prices
over the next decade or more. Asia must undertake structural reforms to adjust
to this new environment of resource scarcity," he added.
Xinhua
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