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ASIA: Sliding Back Into Poverty as Rice Prices Spiral

Larry Jagan

BANGKOK, Apr 20 2008 (IPS) - Food prices are continuing to skyrocket throughout Asia, causing many governments to intervene to stabilise domestic rice prices for fear of acute shortages in the future and social unrest.

And as the price of rice skyrockets across the region more and more people are slipping back into poverty.

“The rising food prices across Asia are threatening to undo the economic miracle of the last two decades,” Paul Risely, regional spokesman for the United Nations’ World Food Programme (WFP), told IPS in an interview. “It’s a silent crisis, a silent tsunami that is tearing through the region, with devastating results.”

Rice – the region’s staple – is the main concern. It has increased in price almost every week now since the beginning of the year. Many exporting nations have implemented bans and restrictions on rice exports to dampen the local prices.

Panic buying, rationing and hoarding are increasing alarmingly, fuelled by fears that rice and other foodstuffs may run out soon in many Asian countries, despite repeated government calls for calm. In Bangladesh, and parts of South-east Asia in particular, panic buying of rice has been reported for fear that stocks in the stores and markets will run out .

Aid agencies working with the poor, including the WFP, are increasingly worried that if this situation continues they will soon have to cut back on their food assistance programmes.

“Malnutrition is almost certainly going to rise significantly in many of the poorest parts of Asia,” ActionAid food specialist John Samuel told IPS.

Already the number of people at risk of hunger or starvation has more than doubled, according to the WFP. In Nepal, the number of people who are in danger of starving if food prices remain high has doubled to eight million, or a third of the population, in the last six months.

Throughout Asia there are mounting signs of discontent and fears for the future as rice prices soar.

In Bangladesh, over the past two weeks there have been long queues of people every day at government stores waiting to buy the heavily subsidised five kg packs of rice and other basic commodities, according to reports.

From the Philippines to Pakistan, from China to Indonesia, the fears are the same – food shortages and hunger. “As prices go up in the world market many millions of people across Asia will face food shortages and possible starvation,” said Risely.

In Thailand, cheap government supported packets of rice are on sale, but the major supermarket stores have rationed their sales to three 5 kg bags per person to prevent panic buying, depleting their stocks too quickly.

Thailand’s commerce minister, Mingkuan Sangsuwan, has announced a government sponsored cut of around 10 percent in all retail rice prices from next week after meeting senior executives of major supermarket chains, rice millers and packers associations. The scheme will end in two months time, when the new rice harvest will ensure supply because of higher yields expected from the crop, according to a spokesman for the Thai Rice Millers’ Association.

“It is the poor that get hit the hardest from food-price inflation, simply because food takes up almost all of their incomes,” said Shamika Sirimanne, a development policy expert with the U.N. Economic and Social Committee for Asia and the Pacific based in Bangkok “The biggest burden, of course, is on the women who are responsible for putting food on the table,” she added.

“Inflation will also erode the real wages of the poorer segments of the labour force and those making a living in the informal sector, making it doubly difficult for them to cope because now they have to pay a lot more for their food, but the purchasing power of their salaries has declined, so they have a lot less to spend,” she explained.

It is certainly the urban dwellers in Asia who are suffering most from the latest food price rises, according to WFP’s Risely. ‘’It is this which is making most Asian governments nervous, for they fear that the soaring rice prices will fuel political and social unrest.’’

“The massive food riots in the Haiti capital recently are a wake up call for all Asian governments,” said ActionAid’s Samuel. “If immediate measures like protective price mechanisms are not taken, there is likely to be food protests here too. There is a social crisis looming which will become a major political problem, especially for Asia’s democracies.”

Already in Bangladesh, Indonesia and the Philippines, which will all have elections in the coming year, there are reports of substantial unrest and growing fears that the anger against rising food prices could spill over into the streets soon.

Malaysia’s ruling coalition’s massive setback in the March elections was attributed by post-election surveys to surging prices of fuel and food.

Even in more controlled societies, like China and Vietnam, there have been reports of small-scale demonstrations and strikes against rising food prices and shrinking job opportunities. In China, there have been frequent unreported demonstrations in many main urban centres over the last six months, according to a western diplomat in Beijing who did not want to be identified.

“There is clearly a potential for further worker unrest resulting from the worsening inflation,” said Geoffrey Crothall, a spokesman for the Hong Kong-based China Labour Bulletin, a non-government organisation (NGO) which promotes workers’ rights in China.

Many experts believe the rice crisis was waiting to happen. Annual world rice consumption has been higher than production for more than ten years, according to Vichai Sriprasert, president of Riceland International, a major Thai rice exporter. As a result, international stocks have been steadily depleted. The only answer, according to most experts, is greater investment in agriculture.

“This is a crisis that has been brewing for years,” said Samuel. “Although there has been substantial economic growth right across the region, this has been in the industrial and service sectors, investment in the agriculture has stagnated or even declined in real terms.”

“Unless there is concerted investment in agriculture in Asian countries, food price hikes will become a perennial problem. This includes investment in irrigation, better water management, improved storage facilities for harvested grain, soft-loans to farmers and comprehensive marketing and delivery systems, and land reform,” he said.

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