This past February, global food prices rose to its highest levels ever recorded since the UN Food and Agriculture Organization began its price index more than 20 years ago. This is the eighth straight month that global food prices have been on the rise and the third straight month that prices have surpassed levels reached during the peak of the food crisis in 2008. So how has Asia been impacted by these price increases?
So far, high food prices in Asia today have not resulted in the same panic that gripped the region back in 2008, when many Asian countries saw rioting in the streets and when governments responded to the crisis by banning or restricting food exports to protect national supplies, which contributed to a worsening of the crisis.
One reason for this is because the price of rice—a key staple of the region and for much of the developing world—has been relatively stable and has not experienced the same precipitous price jump as other foods. Rice prices, however, are still high—in China and Indonesia, for instance, the price of rice is still 23 percent higher than it was a year ago. As the price of other key commodities such as wheat and sugar continues to rise, concern is growing that another major food crisis will strike the region and world more broadly.
Indeed, a handful of Asian countries have already started to stockpile rice to preempt possible future shortages and to balance the high prices of other commodities. While rice supply is steady at the moment, governments are fearful that the continuing food inflation will affect economic development and lead to greater social instability. In January, for example, astronomical onion prices in India resulted in protests (the price of onions have since dropped by 60 percent), and in China, a drought which devastated much of the country’s wheat crop in February prompted the Chinese Premier Wen Jiabao to announce that food inflation was a “top priority” for the country. And as the upheavals in Tunisia and Egypt demonstrate, high food prices can be a major catalyst for social and political instability.
To address these challenges, Asian countries must first ensure that their poor populations are provided with adequate social safety nets, such as food transfers or subsidies, and nutrition programs are put in place to offset the impact of high food prices. The poor typically spend more than half of their income on food, thus protecting vulnerable populations from volatile food prices have the greatest impact on reducing poverty and preventing social unrest. As the World Bank recently reported, an additional 44 million people have been forced into poverty as a direct result of the rise in food prices. Meeting their daily nutritional requirements in today’s climate is thus urgently needed.
More important, however, is to ensure that governments in Asia continue to increase investments in agriculture and rural development in their countries. Investments in agricultural productivity, particularly in crop research and development, should target the long-run challenges to food security, such as increased demand from growing populations and the impact of extreme weather events on food production.
Meanwhile, support for rural development must maximize farmers’ access to both domestic and international markets. In addition to improving the infrastructure that helps farmers to bring their crops to market, better access to new technologies and to information about prices will help farmers make more informed and profitable decisions.
Crisis management in the face of volatile food prices is important. But addressing long-term needs and investing in solutions that increase the resiliency of the food system more broadly is the only guarantee against future food crises.
Robert W. Hsu is Senior Program Officer for Global Policy Programs at the Asia Society and is Project Manager for the Asia Society/International Rice Research Institute Task Force report Never an Empty Bowl: Sustaining Food Security in Asia.