Regional Office for Asia and the Pacific

To prevent a new food price crisis experts urge policy changes

To prevent a new food price crisis experts urge policy changes

Bangkok, Thailand, 02 Oct 2012 -- A high level meeting of more than 120 food and agriculture experts from some 20 countries across the Asia-Pacific region today has called for swift, coordinated international action to stop rising food prices from escalating into a catastrophe that could strike tens of millions of people in the coming months. Recent sharp increases in global market prices of maize, wheat and soybeans and the negative implications of severe droughts in the United States, Russia, Kazakhstan, Ukraine and a few other countries are raising fears of another food price crisis like the one in 2007-2008. Food prices are already twice as high as ten year ago.

“We need to act urgently to tackle rising food prices, which can seriously impact countries that are forced to import food to meet their needs, particularly the needs of the poor," warned Hiroyuki Konuma, FAO Regional Representative for Asia and the Pacific. "Swift, coordinated international action is needed to prevent another food price crisis, which could lead to food riots as well as social and political unrest as it did in 2007 and 2008, when large numbers of the poor people suffered from hunger. In an era of greater food demand by those who can afford more expensive food, we must find creative ways to make sure that everyone has sufficient nutritious food to lead productive lives.”

Despite the fact that Asia and the Pacific have the world’s fastest economic growth, about 578 million people in the region were undernourished in 2010. That represents 62 percent of the world’s hungry people. In many Asia-Pacific countries domestic consumer food prices for basic cereals like wheat and maize increased by 10 to 20 percent in the last year. This makes life worse, particularly for the poor, who spend up to 70 percent of their household income on food.

“However, it is too early to be certain of another food crisis,” said Konuma. “Most importantly rice production is not affected and this year’s rice output is expected to exceed slightly over last year’s historical production record.”

The expert meeting called on countries to “refrain from imposing food export restrictions” and to discourage the excess use of food grains for biofuels. They also urged that “excess speculation on food commodities, beyond the usual market practices” be prevented. Experts advised countries to improve market transparency and for the implementation of social safety nets such as conditional cash voucher schemes and special programmes that help small scale farmers boost sustainable food production and productivity growth. They also called for increased efforts to reduce post-harvest food losses and waste. Nearly 15-20 percent of the food supply is wasted after it reaches the dining table in developed countries and in the middle income countries of Asia.

Kenro Oshidari, World Food Programme (WFP) Regional Director for Asia, said, “One of the key concerns of high food prices is its devastating impact on the food and nutrition security of poor people. For a poor family struggling to bring food to the family table every day, the effects can be crippling.” He said that social safety net programmes are important to protect the most vulnerable populations.

He added that WFP, as a food assistance agency, was also “profoundly affected” by rising food prices, because the same amount of donor funding buys less food from our suppliers. “The problem during a high food price crisis is, of course, that the number of people we need to assist goes up dramatically.”

Ganesh Thapa, IFAD Regional Economist, Asia and the Pacific Division, said: "Food prices have played an important role in the acceleration of inflation across Asia and the Pacific region in recent years. Not only is food price inflation the most regressive of all taxes, it also leads to lower growth and accentuation of income inequality."

Thapa also noted that there is evidence that higher food prices actually can reduce rural poverty and boost income equality, because households dependent on agriculture often make more money due to the higher food prices. “In such a situation, not only does poverty decline, but also income inequality more than compensating for the unfavourable effects in urban areas.”

According to Lourdes Adriano, Asian Development Bank Advisor and Practice Leader for Agriculture, Rural Development and Food Security, “A positive outcome of the 2007-2008 food price crisis was the prioritization of food security on the development agenda, which resulted in increased investment in agriculture.”

The world has experienced three international food price spikes in the last five years. Weather has been among the drivers in each case. Drought in some parts of the world has impaired global grain production virtually every other year since 2007. Elsewhere, major floods have also caused severe damage to crops. Increased diversion of food stocks for non-food purposes and increased financial speculation are among the other drivers of increased price levels and volatility.

The FAO Regional Office for Asia and the Pacific (RAP) set up a monthly and weekly food price monitoring system to watch food prices closely and disseminate this information in time for proactive measures to be taken.

Experts said there is a need for a twin-track approach to rising food prices. Long-term investment in agriculture would support small farmers, while safety-nets would be help poor food consumers and producers avoid hunger, asset losses and poverty traps. The expert meeting said that small-scale food producers could become part of the solution, helping to reduce price spikes and improving overall food security, if countries adopt enabling policies that encourage increased production.

The experts called for more investment in agriculture and social protection and urged countries to discourage panic buying of foodcrops.

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