Rising food prices not a temporary trend: Zoellick

World food stocks at a level bordering on an emergency
Business Times 9 Apr 08;

(WASHINGTON) Rising food prices are not a temporary phenomenon but are likely to persist for several years, World Bank president Robert Zoellick says.

He says strong demand, change in diet and the use of biofuels as an alternative source of energy have reduced world food stocks to a level bordering on an emergency.

Speaking to reporters on Monday before the bank's spring meeting in the coming weekend, Mr Zoellick said the 185-member World Bank would work with other organisations to deal with the crisis by seeking ways to help farmers, especially in Africa, to increase productivity and improve access to food through schools or workplaces.

'This is not a this-year phenomenon,' he said, referring to the price spike. 'I think it is going to continue for some time.' Mr Zoellick said bank forecasters looking at food prices have concluded that a serious risk exists of a significant increase in poverty, which for some countries will reverse gains made over the past five to 10 years.

'A recent assessment in Indonesia shows that over three-quarters of the poor are net rice buyers, and an increase in the relative rice price by 10 per cent would result in an additional two million poor people - about one per cent of the population,' he said.

Mr Zoellick said in some developing countries the new face of hunger and malnutrition can be found in urban areas, where food is available but people cannot afford it.

In a speech last week, Mr Zoellick called for a 'New Deal for Global Food Policy' that would aim to boost agricultural productivity in poor nations. He said the bank would lend almost twice as much money for agriculture in Africa - from US$450 million to US$850 million.

He also would like to see major government-owned sovereign wealth funds of Asia and the Middle East join with the bank and invest in Africa.

Mr Zoellick said the bank could help African countries set up an institutional and regulatory systems that would make investors comfortable with putting their money to work in these nations.

Rice, the staple food for half the world, climbed to a record for a fourth day as the Philippines, the biggest importer, announced plans to buy one million tonnes. Rice gained 2.4 per cent to US$21.50 per 100 pounds in Chicago, double the price a year ago.

Philippine President Gloria Arroyo announced two rice tenders yesterday and pledged to crack down on hoarding.

'We're in for a tough time,' Roland Jansen, chief executive officer of Pfaffikon, Switzerland-based Mother Earth Investments, said. Unless prices decline, 'you will have huge problems of daily nutrition for half the planet.' Mother Earth holds about 4 per cent of its US$100 million funds in the grain. -- AP, Bloomberg

'Food prices likely to persist'
Serious risk of poverty as food costs rise
Today Online 9 Apr 08;

AS rice futures climbed to their highest ever for a fourth day, World Bank President Robert Zoellick said high food prices are likely to persist for several years yet.

More immediately, say observers echoing an earlier World Bank warning, this could feed the potential for unrest as well as the threat to governments in poorer Asian countries.

Mr Zoellick said yesterday, strong demand, change in diet and the use of biofuels as an alternative source of energy have reduced world food stocks to a level bordering on an emergency.

On the price spike, he added: "This is not a this-year phenomenon. I think it is going to continue for some time."

He said bank forecasters looking at food prices have concluded that a serious risk exists of a significant increase in poverty, which for some countries will reverse gains made over the past five to 10 years.

In Indonesia, for instance, recent assessment shows "an increase in the relative rice price by 10 per cent would result in an additional 2 million poor people, about one percent of the population", he said.

Across Asia, governments face strikes, protests and hoarding in response to the spiralling costs that threatens to hurt them at the polls, observers say.

Said Dr Ooi Kee Beng, a fellow at the Institute of Southeast Asian Studies: "There will be unrest and the poorer countries will experience that much more than rich countries such as Malaysia and Singapore."

Poverty-stricken Bangladesh and the Philippines have been particularly hard hit. "Soaring food prices have become a serious threat for the survival of the present caretaker government," said Ban-gladeshi political scientist Ataur Rahman.

The Philippines, one of the world's biggest importers of rice, yesterday announced plans to buy 1 million tonnes to guarantee supplies. Last week, the government deployed troops to deliver grain to poor areas of Manila. It also ordered police to arrest rice hoarders.

In Indonesia, higher fuel costs mean a rise in the price of kerosene which is widely used by the poor for cooking. The late president Suharto was forced to step down a decade ago amid civil unrest, after he raised fuel prices during an economic crisis.

Facing an election next year, President Susilo Bambang Yudhoyono has sworn off further cuts to fuel subsidies but analysts say, most Indonesians are being squeezed anyway by escalating costs of essentials.

The government has responded by distributing subsidised cooking oil and promising rice handouts, but the rice distribution would not reach enough needy people, said Hendri Saparini, an economist with an Indonesian think-tank.

"If in three months, there is no action from the government, I really worry there is going to be social unrest," she said.

In China, inflation threatens to lead to social unrest, as it did ahead of 1989 democracy protests that the military crushed, said analysts. The price of China's staple meat, pork, has risen by more than 60 per cent year-on-year.

In Vietnam, where consumer prices rose more than 16 per cent year-on-year in the first quarter of this year, strikes are becoming more frequent — last week more than 15,000 workers at a Vietnamese shoe factory went on a two-day strike.

In last month's elections, Malaysia's ruling coalition ceded five states to the opposition, which campaigned heavily on high inflation.

Dr Ooi said the political danger from rising prices depends on several factors including the extent of income disparities in a country. "What is decisive is whether or not the population feels that the government is competent and uncorrupted," she said. — AGENCIES