Afp, Manila, The Daily Star, 10 May 2008

Asia’s response to tightening global grain supplies has aggravated food price inflation and uncertainty, according to an Asian Development Bank report released here yesterday.

Export bans and price floors imposed by grain exporters including China, Pakistan, Vietnam and India “have increased price volatility and uncertainty in the international rice markets,” reducing supplies.

These have been “contributing significantly to the surge in rice price especially since the end of 2007,” the Manila-based lender said.

Among the importers, “precautionary demand for food stocks in many countries is contributing to food grain price increases,” said the report, which cited “sustained procurements” in international markets by Bangladesh and the Philippines.

The report, “Soaring Food Prices: Response to the Crisis,” said “strong political and economic factors ” were at play in the food policies of most developing Asian countries, “so that the effect of sharply higher international prices has not been fully transmitted to domestic prices.”

The bank said crackdowns by Dhaka and Manila on private traders accused of hoarding food grains were “difficult to implement” and have in fact “increased prices in the domestic market of many countries.”

The report also said the “lack of efficient logistics systems and infrastructure for food grain marketing and distribution” has “tightened the market further” in Afghanistan, Bangladesh, Nepal, the Philippines, and Tajikistan.

The bank announced at its annual meeting in Madrid earlier this week that it will provide 500 million dollars in immediate assistance to member nations hit hardest by soaring food prices.

Longer term, the report urged Asian countries to correct “distortions arising from interventionist price and trade policies,” increased investments in irrigation, related farm infrastructure, and research, and upgrade of drying and storage facilities to cut post-harvest losses of up to 30 percent.

It also called for improved farmer and rural poor access to credit.

The ADB estimates that the soaring food prices could affect a billion people in Asia, home to two-thirds of the world’s poor and where spending on food accounts for 60 percent of total average expenditure.

Bank president Haruhiko Kuroda has also warned that the food problem could cut into decades of economic gains in the Asia-Pacific region.

EDITORIAL

The Daily New Age, 28 November 2007

The economy is in dire straits, so says the Asian Development Bank in its quarterly economic update, which was released on Monday. The conclusion of the Manila-based lending agency is a reiteration and reinforcement, if you like, of what New Age has written in these columns on several occasions in the past few months. We believe the economy is about to face an unprecedented crisis in not-too-distant a future and, as we have said so many times before, agriculture remains the only potent avenue to minimise the impact of the impending crisis. Agriculture contributes about a fifth of the GDP and employs more than half the labour force in Bangladesh. Besides providing employment to over two crore people, it directly affects almost 10 crore people.
   Typically, a sudden loss of income opportunities characterise an economic crisis. The signs that we may be at the brink of one are there. The aman crop has been lost to floods, insufficient rain and finally cyclone Sidr. Mismanagement in fertiliser has only compounded the problem. While agriculture is in the doldrums, other sectors have not shown any signs of revival or reversal of the trend that they exhibited ever since the military-driven interim government took office in January.
   Against such a grim backdrop, increased investment in, and renewed focus on, agriculture remains the most viable strategy to ease the impact of an economic crisis. With the right effort and swift mobilisation of resources in the right direction, the revival may begin as early as in the coming boro season. Agriculture being a labour-intensive sector, its revival will translate into employment for hundreds of thousands of people and livelihood for literally millions more. Improvement of the agriculture sector would also mean gradual and eventual increase in the real wages for the rural poor. Besides, a planned agricultural system would lead to a decreased import dependence which has become necessary due to extensive mono-cropping. The cropping pattern should be coordinated ensuring adequate production of such essentials as spices besides food staples, for which the government should make all-out efforts.
   The economy does not stand any chance of evolving into a vibrant one if import dependence is not lessened, since that would not add to the aggregate produce. On the other hand, not only a near-adequate production of food items would mean less expenditure of foreign currency but also their production will affect the supply and processing chain eventually spurring a string of economic activity. A vibrant economy of over 140 million people by itself provides a sustainable market for almost any basic product.
   In the final analysis, although we strongly desire modern technology to revolutionise agriculture, it must not follow the path as dictated by the multilateral lending agencies such as the World Bank or the International Monetary Fund that only deem this sector as another commercial sector, which it is not. The strategy, whatever that may be, to revitalise agriculture must be home grown and adopted in consultation with farmers, economists and other sections of the citizenry.