High food prices to make millions dirt poor

Ten per cent inflation to push 23 million Indians in villages, 6.68 million in cities into poverty: ADB report

Titled as 'Global Food Price Inflation and Developing Asia', the report claimed that a 10 per cent rise in domestic food prices could push 64 million Asians to subsist below the poverty line level of $ 1.25 a day.

In case of India, while food inflation at 10 per cent will render 23 million people in rural area and 6.68 million living in cities as dirt poor, a 20 per cent rise in food prices will throw 45.64 million rural people and 13.36 million urban people into the woeful state.
"For poor families in developing Asia, who already spend more than 60 per cent of their income on food, higher food prices further reduce their ability to pay for medical care and their children's education," ADB Chief Economist Changyong Rhee said.

"Left unchecked, the food crisis will badly undermine recent gains in poverty reduction made in Asia," Rhee added.

According to the preliminary data released by Planning Commission last week, India's poverty is estimated to have declined to 32 per cent in 2009-10 from 37.2 per cent five years ago. The short-term outlook looks bleak, as food prices are likely to continue with their upward trend because of factors such as production shortfalls, rising demand for food from more populous and wealthier developing countries and shrinking available agricultural land, said the report.

Other dampening factors behind the double-digit rise, seen in the prices of wheat, corn, sugar, edible oils, dairy products and meat, high oil prices and export bans by several key food producing nations. Some countries like China, India, Indonesia, Korea, Malaysia and Thailand are fighting inflation through tighter monetary policy. To the extent that inflationary pressures are supply- driven, as in 2007–2008, higher interest rates may be less effective in controlling it. The report  calls for enhanced market integration and elimination of policy distortions that create hurdles in transferring food from surplus to deficit regions, besides controlling speculative activities in food markets.