High food prices prevent 20 million to emerge from poverty
ESCAP study warns food inflation can delay MDG achievement by five
years:
High food prices prevented 19.4 million people in the Asia-Pacific
region from climbing out of poverty last year and persisting food and
oil inflation can keep up to an extra 42 million people poor in the
region, a new United Nations, a study released said.
An assessment by the UN Economic and Social Commission for Asia and
the Pacific (ESCAP) warns that rising food prices can postpone the
achievement of the first Millennium Development Goal (MDG) on poverty
reduction by half a decade in many countries in the region, particularly
Bangladesh, India, Lao Peoples Democratic Republic 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, says the study by ESCAPs Macroeconomic Policy and
Development Division (MPDD).
Bad weather in key food-producing countries, increasing use of crops
in 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 which examines the underlying causes of
inflation in the region and its wider impact, and suggests short-,
medium and long-term policy responses for governments and central banks.
It analyses different scenarios for the year ahead for inflation
presently forecast at 4.6 percent for developing ESCAP economies.
The scenarios assume food price inflation at half the 2010 rate, at
the same rate as in 2010 and at twice the 2010 rate.
Under these scenarios, higher food and rising oil prices may slow
down poverty reduction even further, affecting from 10 to 42 million
additional people.
Policy responses to high food prices over the short-term include mild
monetary tightening by the central bank. After a temporary supply shock,
inflationary expectations can be prevented from becoming entrenched
through a monetary response, says ESCAP.
Other short-term measures include lower tax and tariff rates, free
imports and bigger food stocks to lessen the impact of temporary supply
shocks.
Strengthening social protection programs 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, United Nations Under-Secretary-General and ESCAP Executive
Secretary Dr Noeleen Heyzer said.
The study underlines the importance of regional cooperation through
joint buffer stocks such as those created by ASEAN and SAARC in the face
of temporary supply shocks.
Over the medium and longer terms, reversing the neglect of
agriculture in public policy and overseas aid priorities is vital.
Promoting higher agricultural productivity is the key policy response
with public resources needing to be shifted from subsidizing consumption
to boosting agricultural productivity.
This requires a sustained program of agricultural research, public
education and better-designed rural extension programs.
According to the study, given the role of speculative activity in
exaggerating food and oil price shocks driven by massive liquidity
injections in the developed countries of the West, the ESCAP study
recommends the regulation of such activity, including position limits,
rather than an outright ban.
The single most important policy initiative for developing countries
in the region is to give priority to boosting the agriculture sector.
Imbalances in global supply and demand of food could be substantially
minimized if todays net importing countries, particularly the least
developed countries in Africa and Asia, improved their agricultural
productivity. Bangkok (UN ESCAP Information Services)
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