Grim report on food from the ADB
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Grim report on food from the ADB

But the reasons may have less to do with to do with production than economics, writes Asia Sentinel’s John Berthelsen

The Asian Development Bank, in a report issued Tuesday, is warning that global food prices, which have skyrocketed by an average of 30 percent year on year, gross domestic product growth for some food-importing countries “could be choked off by up to 0.6 percent.”

Combined with a 30 percent annual increase in world oil prices, GDP growth could be reduced by as much as 12.6 percent, tipping nearly 65 million additional people into poverty in developing Asia, according to the report, titled Global Food Price Inflation and Developing Asia.

The question is why this is happening. There have obviously been localized weather problems in some areas, including drought in China’s wheat-growing areas – which was broken before it did real damage to crops – as well as floods in Pakistan and other regions.

But two of the world’s biggest countries have come through largely unscathed. China announced on March 10 that it expects a record grain harvest despite the drought, making it the country’s eighth successive annual record harvest, at 546 million metric tons of grains. In addition, India announced on April 6 that it would harvest an estimated 235 million tons of foodgrains in the crop year ending in June, an all-time record, which is expected to turn India into a grains exporter.

In addition global rice production, which feeds a huge population in Asia, has been outpacing demand since the 2004/05 crop year, the seventh straight year of surplus production. Demand growth for rice has averaged only 1.1 percent over the past 10 years. Soyabean production is expected to rise by 4.1 percent year on year, reaching 269 million tons while consumption, even though rising slightly faster, will reach 268 million tons, just below production.

The ADB report blames production shortfalls due to bad weather as well as structural and cyclical factors at play during the 2007-2008 food crisis. In particular, the report says, the world is coming off one of the worst El Nino-La Nina in recent decades. As well, the report says, “supply-side factors include competing use of food grains, especially corn and rapeseed oil, to produce biofuel; urbanization and diversion of agricultural land for commercial purposes; increasing scarcity of fresh water for irrigation; low crop yields, rising input costs, and neglect of investment in agricultural technology, infrastructure, processing facilities, and agriculture research and development.”

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