Regional Office for Asia and the Pacific

Food prices in Asia remain high - FAO calls for urgent action

Bangkok, 11 May 2011 -- “Domestic prices of rice and wheat in Asia, remain at high levels in many countries of the region, having declined only slightly in April." Speaking at news briefing here today, Hiroyuki Konuma, FAO Regional Representative for Asia and the Pacific and Assistant Director-General (FAO) warned: “Countries urgently need to take precautionary measures to prevent a possible re-emergence of the 2008-9 food price crisis and invest more in sustainable food production increases, the long-term solution to the problem of rising food prices.”

Though the March 2011 was globally the first decline in the FAO Food Price Index in nine months, Mr Konuma warned “This might not represent a reverse in the long term trend as the overall conditions that have been forcing food prices higher have not changed, although international wheat and maize prices have fallen suddenly last week as a consequence of volatile crude oil prices which declined by nearly 15 percent overnight.”

High and volatile food prices disproportionately threaten the world’s poor, because at recent levels, food purchased can drain as much as 70 percent of their income. “In spite of the many dynamic economies in Asia, the region is still home to over 60 percent of the world’s one billion hungry people,” said Mr Konuma.

FAO Food Price Index
Globally, the FAO Food Price Index averaged 232 points in April 2011, virtually unchanged from the revised March estimate and 36 percent above April 2010. Still, the index was two percent below its peak in February 2011. Declining prices in sugar and edible oil in April were offset by a sharp increase in international cereal prices, while dairy and meat prices were mostly unchanged.”

High food prices threaten government budgets and stability
Food-importing countries are particularly threatened by high food and commodity prices, because the high prices drive up foreign debt, which can lead to political and social unrest as governments reduce social services due to the increased cost of importing food.

Food prices are mixed from one Asian country to the next
According to FAO, domestic rice prices eased in a number of Asian countries, for example, Cambodia saw its rice prices drop by 2 percent in April. In Sri Lanka the price fell by 2.3 percent.

In Bangladesh, retail prices of rice fell by about 0.6 percent in April, but are still 29 percent higher than the price one year ago. In Viet Nam, rice prices increased by six percent in April and were about 40 percent higher than a year earlier. In the Lao People’s Democratic Republic the price of rice in the capital Vientiane was stable but still 40 percent higher than in March 2010.

In India, wheat prices declined by about seven percent in April after the crop harvesting season started. However, retail rice prices in Patna and Chennai in April were respectively 30 and 10 percent higher than one year ago. 

In China, the February 2011 retail price of rice (Japonica) and wheat flour were respectively 23 and 16 percent higher than one year earlier – and this trend continued in March and April.

In Asia, where rice is one of the most important commodities, FAO’s 5 May issue of Global food price monitor says: “The export prices of rice continued to fall in April, with the benchmark Thai rice price for Thai white rice 100 percent B, averaging US$507 per tonne, down 3 percent from the previous month.” The decrease mainly reflects large export supplies after the good 2010 harvests in the main exporting countries of the region. In April, the benchmark Thai rice price was nearly 2 percent higher than a year earlier, but it was 47 percent below the peak of May 2008.

Hunger and poverty in Asia
Some 44 million people have been pushed into extreme poverty, since October 2010 by rising food prices, according to a World Bank report issued earlier this year. And, in a report that echoes warnings already issued by FAO and the World Bank, the Asian Development Bank said last week that rising food prices could plunge an additional 64 million people into poverty across developing Asia, an increase of 7.2 percent. Food price inflation needs to be a priority for policy makers because of its impact on the poor. The ADB warned that heightened food inflation could dilute the region’s hard-won gains in poverty reduction.

Pointing out that high food prices slow poverty reduction in the region, ESCAP last week warned that the poor in Bangladesh, Laos and Nepal are the most vulnerable to the poverty-enhancing impact of high food and oil prices.

Mr Konuma added that for dealing with food price hikes the neglect of agriculture and food production by the international community and national governments must end. It should be possible to double the cereal production over the next 40 years, if the wisdom of science and technology gained from past experiences is utilized and sufficient resources are invested in agriculture.