No quick therapy for food price inflation despite counter-measures to ease pressure

Food price inflation which has aroused growing concerns worldwide seems unlikely to be cured quickly despite counter-measures by world institutions and the crisis-plagued nations.

The UN Food and Agriculture Organization (FAO) warned last Friday that food riots in developing countries would spread unless major steps are taken to cut down prices for the poor.

By far, civil disturbance and riots caused by food shortage and higher prices have erupted reportedly in about 33 countries worldwide. Among them, 20 had imposed related food-price controls.

Compared with people in rich countries who have begun to feel the pinch of higher food prices, the effect is far more pronounced in poor nations where more than 50 percent of the income goes to food.

PRICE HIKE THREATENS STABILITY IN ASIA

The World Bank has warned of possible heightened political tension in Asia if rising inflation hampers poverty reduction measures. Asian leaders are on guard against potential social unrest as people across the region struggled to cope with spiraling cost of food and other essentials.

In the Philippines, one of the hardest hit by soaring rice price, people have been scrambling to bolster their stockpiles ahead of a traditional lean period in third quarter.

Consumers in the capital Manila have queued to buy state-subsidized bags of grain amid worries about shortage while troops were deployed to allocate grain to poor areas of the capital.

Analysts have warned that the price hike could trigger unrest in the island nation following rioting in countries such as Haiti and Egypt.

In Vietnam, strikes broke out more frequently after the Consumer Price Index rose more than 16 percent year-on-year in the first quarter of 2008.

The price of rice in poverty-stricken Bangladesh has jumped by more than 30 percent in the past year. Last Saturday, some 20,000 workers rioted over high food price and low wages near its capital Dhaka. At least 50 protesters were injured in a clash with the police who fired tear gas and used batons to disperse the demonstrators.

Even in Thailand, the world's leading exporter of rice, worries about supply shortage have sparked panic buying as consumers stock up in hopes of beating future price hikes.

The benchmark Thai variety, Thai Pathumthani fragrant rice, was priced more than 900 U.S. dollars per ton in April, up 50 percent from one month earlier, according to the Thai Rice Exporters Association.

Experts attributed the food price inflation in Asia to mounting global crude oil prices. Global investment fund as well as the weak dollar are also among the factors responsible for high world food prices, according to a senior FAO official.

MEASURES TAKEN TO COPE WITH CRISIS

The Philippine government has temporarily lifted the quotas on rice to ensure sufficient domestic supply. It also announced major new investments to boost agricultural production early April.

Last Friday, it called for a meeting of Asian ministers to discuss a global rush for the grain that has heightened concerns about food security.

We must address the plight of poor families in the countries most affected by the price rise crisis, Agriculture Secretary Arthur Yap said at a meeting at the International Rice Research Institute (IRRI).

In Malaysia, the Agriculture Ministry said it planned to earmark an additional 1.9 billion U.S. dollars to open up new rice plantations and build irrigation to raise production.

FAO Director General Jacques Diouf said the priority to solve food crisis was a massive seed transfer to ensure farmers in poor countries could buy seeds, fertilizer and feed at prices they could afford.

The creation of financial mechanisms to enable poor food importing countries to buy needed food and offer an aid budget to agriculture would also be helpful in addressing the problem, he added. 　

NO IMMEDIATE CURE FOR FOOD CRISIS

Despite the efforts, the IRRI predicted last week that rice prices could probably keep rising for some time as production fails to keep up with soaring demand.

Experts say that even though world cereal production is expected to increase this year by 2.6 percent to a record 2.16 billion tons, this would have little impact on the prices because price speculation and market failures will likely to reduce the effect of boosted production.

All indication we have is that this is not a short-term effect, Diouf has said.

World Bank President Robert Zoellick warned that the rising trend of prices could continue for several years.

This is not a this-year phenomenon, I think it is going to continue for some time, he added.

Source: Xinhua