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Asian Bank Moves To Address High Rice Prices

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The Associated Press

Published: May 4, 2008

MADRID, Spain - The Asian Development Bank announced emergency funding Saturday 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 hardest hit by the global food crisis, such as Bangladesh, said the bank's president, Haruhiko Kuroda, declining to provide exact figures. But he warned that even after the current crisis passes, prices may keep rising.

"The cheap food era may be over," Kuroda said at a news conference in Madrid during the bank's 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 - 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 says could backfire by discouraging farmers from planting, thus reducing supplies and raising prices.

Kuroda also said the bank opposes Thailand's idea for a rice-exporting cartel along the lines of OPEC but prefers to let market forces operate.

Soaring prices have been stoked by higher fuel costs, unpredictable weather and greater demand.

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