Soaring food prices - Response to the crisis

May 2008

Soaring food prices have hit the poor hard. Along with record-high energy prices, these have seriously eroded the purchasing power of over-a-billion poor in Asia, increasing their food deprivation. These are threatening to undermine the global fight against poverty. These have also stoked inflation and squeezed the fiscal space in many countries, increasing the risks of higher interest rates and a slowdown in economic growth across the Asia and Pacific region. The downside risks to macroeconomic stability have increased in a region otherwise characterized by prudent macroeconomic management for nearly a decade.
A number of underlying causes of the recent surge in global food prices—some cyclical and some structural—can be seen most prominently in the international prices of cereals, particularly for the two most important staple food grains produced and consumed in Asia—rice and wheat.
The cyclical factors are short-term phenomena that will ease over the year but the structural factors are medium to long term and indicate that the problem of high cereal and food prices will continue into the foreseeable future. Cyclical and structural factors may impact the price by raising demand or by reducing supply and this food crisis calls for immediate response of governments and the international community.

By: Asian Development Bank (ADB)

 
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