MADRID - The Asian Development Bank announced emergency funding yesterday to help poor countries struggling with rice prices that have nearly tripled in four months.
The aid will come in the form of sizable soft loans for countries hit hardest by the global food crisis, such as Bangladesh, said Haruhiko Kuroda, the bank's president, declining to provide exact figures. But he warned that even after the crisis passes, prices may keep rising.
"The cheap food era may be over," Kuroda told a news conference in Madrid, where the bank is holding its annual meeting.
Asia is home to two-thirds of the world's poor, and nearly 1.7 billion people in the region live on $2 a day or less. Asia's poor are particularly vulnerable to rising prices for staples such as rice because 60 percent of their spending goes toward food, and the figure rises to 75 percent if fuel costs are included, the bank said.
Many countries in Asia are grappling with the crisis by imposing price controls or bans on food exports - a tactic the bank said could backfire by discouraging farmers from planting, thus reducing supplies and raising prices.
"We believe targeted interventions to protect food entitlements of the most vulnerable and poor are more effective to mitigate the immediate impact of rising food prices," Kuroda said.
He also said the bank does not like Thailand's idea of creating a rice-exporting cartel along the lines of the Organization of Petroleum Exporting Countries, but prefers to let market forces operate.
The Manila-based Asian Development Bank was created in 1966 to fight poverty in the Asia-Pacific region, and every other year holds its annual meeting in one of its 19 member countries.