Poor face hardship as era of cheap food ends

by Hoang Nhu Hoa

High prices of food in Asia and the rest of the world will have their greatest effect on the lives and nutrition of poor people but there are no signs of a food crisis because sources and supplies are secure.

Early this year, Indians people gathered to stage a protest against the rising price of onions, a staple food in India. They had to pay up to 100 rupees (more than US$2) for 1kg of onion, a three-fold increase.

In Indonesia, the price for the once humble chilli has surged five-fold to 100 rupiah or $11 per kg in recent months, making it even more expensive than beef, threatening to put the country's favourite spice beyond the reach of many.

Across South Korea, many people have had to cut kimchi out of their meals due to the skyrocketing price of cabbage, $8-9 a cabbage a 10-fold increase.

World food prices surged to an historic peak in January since the food crisis in 2008, the Food and Agriculture Organisation Food Price Index shows.

The index rose for the seventh consecutive month, averaging 231 points in January, up 3.4 per cent from December and the highest since the UN agency began measuring them in 1990.

The figure shows big increases in particular for dairy, cereal and oil prices. The rises are most significant in China, India, Indonesia and Russia, according to data from FAO's monthly report.

Capital Economics, a consultancy firm in London, blamed extreme weather conditions last year while FAO said "the increase in prices follows stronger export demand during the last month and concern about tightening supplies and a weaker US dollar."

The organisation's representative in Viet Nam, Yuriko Shoji, told Viet Nam News Agency there were many reasons leading to food price increases but the immediate reasons were the prices of commodities like oil and sugar which rose over a short period as well as the scarcity of wheat caused by crop failures in Russia and its export ban.

"The food prices are also subject to the effects of the elements, such as climate conditions, plus currency fluctuations and other economic factors, not only the crop itself," Shoji said.

Those most affected by high food prices were the poor, she said.

"They will be seriously affected because they spend up to 70 per cent of their income on food.

"In Sub-Saharan Africa, one out of three people is chronically hungry. And we hope that the rise in food prices don't impact negatively on the poor."

However, Shoji said there was no concern about a world food crisis because the sources and supplies of food had improved in comparison with previous years.

The World Bank estimated in its Food Price Watch this month that an additional 44 million people may have fallen into poverty in low and middle-income countries due to the rise in food prices since June last year.

Moreover, higher poverty is accompanied by increased malnutrition as poorer people eat less and turn to cheaper and less nutritious substitutes.

FAO senior economist Abdolreza Abbassian said high prices were likely to persist for months.

"People who are already undernourished may have to forgo a meal. It does add to the number of hungry people," Abbassian said.

The situation was alarming but had not reached world crisis stage as it did three years ago, he said. A sharp rise in food prices in 2007 and 2008 triggered food riots in a number of African countries as well as in Haiti and the Philippines.

Organisation regional representative for Asia and the Pacific Hiroyuki Konuma said food supply and demand was tight but the situation was not as severe as 2008 because grains stocks were sufficient at about a quarter of annual production.

"Fluctuations in prices are natural but over-speculation beyond certain limits affects the lives of the poor. The world should discuss the matter very seriously," Konuma said.

European Union executives played down the risk of a repeat of 2008's food crisis, saying world grain stocks were much higher than then, but warned the era of cheap food had ended.

"Even after 2012 when prices come down to a more normal level we are left on a different plateau. We are at a much higher level than we used to be in the first part of the 2000s," European Commission farm spokesman Roger Waite said.

"What matters for people – particularly in developing countries – is the prices in their own local currencies, and most of these currencies have appreciated compared with the dollar," the lead author of the World Bank's January report, Andrew Burns, told Reuters.

Last month, FAO published a guide for policy-makers in developing countries to help address negative impacts of high food prices.

But the policy warned there was "no one-size-fits-all" solution that could be applied with the same chance of success in every country.

"The mix of policy and programme actions has to be specifically adapted to local conditions" and care should be taken "not to adopt measures that could undermine the existing market," the policy said.

Governments of many Asian nations have responded to the rising food prices with different measures.

China has sold large volumes of maize, wheat, soy, rape seed oil, sugar and rice from state reserves to ease tight supplies and cool prices. The Chinese government plans to increase farm subsidies and implement projects to grow genetically modified crops to try and maintain self-sufficiency in grains.

Indonesia has its own measure: the president called on households to plant their own food to help stave off inflationary pressures.

As a short-term solution to the scalding pepper prices, Indonesian Agriculture Minister Suswono said he was preparing a national campaign to encourage people to plant chillies. He said free seeds would be distributed to 100,000 households.

The 10 members of the Association of Southeast Asian Nations and their dialogue partners, China, Japan and South Korea, have agreed to establish rice reserves in each country.

To prevent a repeat of the mistakes during the 2008 food crisis, they agreed to stabilise the rice prices without making "sudden and demonstrative procurements" that could trigger panic among trade members.

Now is the harvest season in the Cuu Long (Mekong) Delta provinces and many Vietnamese rice-exporting companies have been purchasing rice to build up stocks following a government call on ensuring sufficient supply of food, foodstuff, fuel and oil products.

Food price rises will cause difficulties this year and measures are needed to help the poor get enough to eat. — VNS