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ADB warns on soaring food prices

April 26, 2011 at 1:23 AM   |   Comments

MANILA, Philippines, April 26 (UPI) -- Soaring global food prices threaten to push tens of millions of Asians into extreme poverty, the Asian Development Bank said in a report Tuesday.

The ADB, headquartered in Manila, said food prices rose to record levels in the first two months of 2011. It said fast and persistent increases in the cost of many Asian food staples since the middle of last year, along with rising oil prices, are a serious setback for the region as it rebounds from the global economic crisis.

Domestic food inflation in many regional economies in Asia, home to 3.3 billion people, has averaged 10 percent in early 2011, the report said.

It warned a 10 percent rise in domestic food prices in developing Asia could push an additional 64 million people into extreme poverty based on the $1.25 a day poverty line.

"For poor families in developing Asia, who already spend more than 60 percent of their income on food, higher food prices further reduce their ability to pay for medical care and their children's education," said ADB Chief Economist Changyong Rhee. "Left unchecked, the food crisis will badly undermine recent gains in poverty reduction made in Asia."

The report said if the global food and oil price rises continue for the remainder of 2011, economic growth in the Asian region could be reduced by as much as 1.5 percentage points. It said the pattern of higher and more volatile food prices is likely to continue in the near term.

"Efforts to stabilize food production should take center stage, with greater investments in agricultural infrastructure to increase crop production and expand storage facilities, to better ensure grain produce is not wasted," Rhee said.

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