ADB to meet amid food crisis, growing poverty

Channel NewsAsia 2 May 08;

MANILA : The Asian Development Bank holds its annual meeting this weekend reeling from a global food crisis that has led to stinging criticism of its international governors for failing to see it coming.

The soaring price of basic foods such as rice -- the benchmark Thai variety now fetches some 1,000 dollars a tonne, up threefold on a year ago -- has led to a supply crunch that is worrying governments wary of popular unrest.

There are other tough issues facing the bank, notably a simmering internal row among its members over its continuing relevance in a region that has been transformed since the lender was founded 42 years ago.

The United States, which with Japan is the ADB's largest shareholder, took the unprecedented recent step of voting against its long-term strategic plan, which is also on the agenda for the meeting in Spain's capital Madrid.

But a source within the bank, who asked not to be named, said: "While the bank faces a number of critical issues about its role and relevance, all this may be overshadowed by the food crisis."

ADB president Haruhiko Kuroda warned recently that soaring food prices had pushed back Asia's fight against poverty, and that some countries may one day need foreign aid to feed their hungry.

The rises are blamed on higher energy and fertiliser costs, greater global demand, droughts, the loss of rice farmland to biofuel plantations and price speculation.

"The food crisis did not happen overnight," said Shalmali Guttal, a senior associate at Focus on the Global South, a Bangkok-based political and economic advocacy group.

"Asian farmers have been drawing attention to the growing agrarian crisis for years, but no one with the power to change policy listened," she told AFP in a telephone interview.

"Many of us civil society researchers and activists saw this crisis coming, why didn't the ADB and the World Bank?"

While the ADB boasts some "spectacular progress" over the last 40 years in poverty reduction, most notably in China, the region is still home to some 600 million people living on less than a dollar a day -- two thirds of the global population.

"Agriculture has clearly been neglected by governments and international institutions alike for at least two decades and the world is now suffering the results of such neglect," Bruce Tolentino, director for economic reform and development with the Asia Foundation, told AFP.

He said the ADB and others "should have seen this crisis coming."

"But unfortunately it is a weakness common to many institutions, including the ADB, that the left hand doesn't know what the right hand is doing and vice versa."

Based in Manila, the ADB is owned by its 67 member countries -- 48 from the Asia-Pacific region, and 19 from elsewhere around the world.

In 2007, it approved 10.1 billion dollars of loans, 673 million dollars in grant projects, and technical assistance amounting to 243 million.

Since it was established, the ADB has grown from helping Asian governments develop infrastructure projects to promoting the role of the private sector in development.

But some critics say its loan conditions unfairly pressure governments to deregulate and privatize agriculture -- leading to problems such as the rice supply crunch.

Arze Glipo, the convenor of the Asia Pacific Network on Food Sovereignty, which represents farmers' groups, said ADB projects "tended to weaken farmers' livelihood."

She cited a 175-million-dollar loan to the Philippines to finance a grain sector development programme, under which the ADB urged the privatization of the National Food Authority.

The ADB also wanted restrictions on rice imports replaced with a system of tariffs, and cancelled the loan when Manila failed to act, she charged.

That kind of tactic -- "regardless of its costs and consequences" -- is at the very heart of the problem, said Guttal of Focus on the Global South, as it forced governments to change policies to fit in with the ADB's conditions for credits.

"The new policies favour large, mostly foreign, private sector actors and corporations and not the poor," she added.

- AFP/ir