Financial Crisis Affects Food Prices

Purushottam Mudbhary, of the United Nations' Food and Agriculture Organisation or FAO's regional office for Asia and the Pacific explains:

"It will affect the food security particularly for the low income group, those who are dependent on employment, and those who are dependent on market to buy their food, they will be adversely affected. There will be some problems for them as we see there will be negative impact of the global financial crisis on their income and livelihood opportunities"

Riots and demonstrations

Earlier this year, as a sharp rise in rice prices triggered riots and demonstrations in the region, many South East Asian governments tried to tackle the problem in different ways either by controlling prices and introducing harsh punishments on merchants who raise prices or by banning or restricting exports of rice.

The rice price has been in a steady increase over the last decade as a result of poor harvests, however the reason behind the current soaring prices is different; it is the global financial crisis which left many people with low or no income.

Professor Benjamin Dikno from the Philippines Economic School explains:

"The high cost of food has resulted in high poverty and high incidents of hunger. For the poor about 60% of their commodity basket goes to food, so a significant increase in the price of food could have an impact on their real consumption"

Relief packages

Organisations like the FAO have already initiated plans to address this problem, according to Mr Mudhburry. The FAO is providing short term support to farmers in rural areas and helping governments prepare short and long term plans to increase food production and enhance food security:

"We need to enhance governments’ support as well as private sector’s investment in creating jobs. Governments need to create job opportunities in the domestic sector through initiation new projects and to provide employment particularly to people who will be returning to rural areas from urban areas"

Dire consequences

Governments of course play a crucial role in solving this problem; however Professor Dikno believes the problem is far more complicated than that:

"Because of lack of consumer confidence the demands for goods has gone down and industries are not likely to expand their operations because of weakening consumption so the governments have a role to play (...) governments may have to invest in public infrastructure to create a lot of jobs but this is only a part of the solution. I think you have to adjust also the production side"

Another dangerous consequence experts predict is child malnutrition; children are the most vulnerable group in any society and will likely to suffer harshly from this crisis. Child malnutrition in Asia pacific has reached 30%; Bangladesh, Pakistan and India alone are home for more than half of the world underweight children according to the latest UNICEF statistics. If this problem is not addressed immediately the region is facing the risk of an increase in child malnutrition.