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ADB warns against another food shortage in Asia
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Developing Asian countries must implement structural reforms that support the agricultural sector or else face another dramatic rise in food prices, the Asian Development Bank (ADB) said on Tuesday.

In the Asian Development Outlook 2008 Update, ADB said that even though the price of food staples, like rice, have fallen to more sustainable levels in recent months, the crisis is not yet over.

"Demand for food continues to outstrip supply," ADB chief economist Ifzal Ali said in a press release.

"Asia is just one supply shock away from another grain price spike," he added.

The price of rice rose from below US$400 a ton at thestart of the year to US$1,200 a ton in May, before falling to US$730 a ton last week. Although there were many drivers of this year's global food crisis, chronic supply issues remain the most significant force pushing prices higher, ADB said.

Over the past decade, population and income growth have far outpaced productivity growth as measured by rice yields per hectare, it added.

In its latest report, ADB said that this is a direct result of declining public investment in the infrastructure, institutions, and innovations that underpin agricultural productivity growth.

"Governments have to invest in public goods that support agricultural productivity growth and allow clear market price signals to pass through to producers and consumers alike. Only a robust supply response by Asia's farmers can bring down prices to comfortable levels again," Ali said.

ADB said that food prices will not return to the levels seen prior to 2008, at least for the foreseeable future.

Even if governments begin to invest in the agricultural sector,it will still take several years of good harvests to rebuild dwindling global grain stocks, said the Manila-based development bank.

"To do this, the prices that farmers receive for their produce must stay high, particularly since input costs have risen with oilprices. Fertilizer prices, for example, have soared and transport and other fuel-related costs for farm machinery are also up," saidthe economist.

"The world has seen a reversal of patterns, with declines in real food prices over the last three decades and the prospect of high food prices over the next decade or more. Asia must undertakestructural reforms to adjust to this new environment of resource scarcity," he added.

(Xinhua News Agency September 16, 2008)

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