Rising food prices to keep people poor - UN report

MANILA, Philippines - Rising food prices may hamper efforts by some Asian countries, including the Philippines, to eradicate extreme poverty and hunger under the Millennium Development Goals, according to a United Nations report.

The UN Economic and Social Commission for Asia and the Pacific (ESCAP) said high food prices prevented more than 19 million people in the Asia-Pacific region from lifting themselves out of poverty last year. For next year, 10 to 42 million more would likely be affected.

The report also warned that soaring food and fuel prices would keep large sections of the region’s population below the poverty threshold.

Likely to be affected most are Bangladesh, India, Laos and Nepal.

“Rising food prices are adding to inflationary pressures across the Asia-Pacific region. They are seen as a key downside risk to sustaining recovery in 2011. More startlingly high food prices in 2010 have kept 19.4 million people in poverty in the region, people who otherwise would have been out of poverty today,” ESCAP’s Macroeconomic Policy and Development Division said.

Bad weather in key food-producing countries, increasing use of crops as biofuels and speculation in commodity markets have added to a long-term decline in agriculture investment and affected global food supplies, according to the study.

The study examines the underlying causes as well as impact of high prices in the region, and suggests short, medium and long-term policy responses for governments and central banks.

“Policy responses to high food prices over the short term include mild monetary tightening by the central bank. Other short-term measures include lower tax and tariff rates, freer imports and bigger food stocks to lessen the impact of temporary supply shocks including food safety nets and food vouchers or other such measures are critical to protect the poor and vulnerable people who are most severely affected from soaring food prices,” said Noeleen Heyzer, ESCAP executive secretary.

The study also stressed the importance of regional cooperation through pooling of buffer stocks of food. It also said the single most important policy initiative for developing countries in the region is boosting the agriculture sector.