Global Food Prices Up By An Average Of 36 Percent

April 29, 2011 - PRLog -- Asian Development Bank has reiterated the World Bank’s warning against rising food prices. Unrest in the Middle East and Northern Africa has pushed oil prices, and in turn, global food prices up by an average of 36% since last year, pushing 44 million people under the poverty line since June. A report by the Asian Development Bank finds that domestic food prices have risen at an average of 10% in many Asian economies this year, putting a dent in growth. The same report also states that a 10% rise in domestic food prices may result in almost 64 million people being pushed into extreme poverty. Poor families in developing Asia already spend 60% of their income on food.

In February, around 40,000 gathered in Delhi to protest against the prices of pulses, milk, wheat, rice and vegetables, which have gone up sharply. Asian countries have been struggling to cope as the cost of rice has reached record levels; the staple for an entire continent has alone experienced a 70% increase over the past year. Shortages have even begun to hit importing countries, as exporting countries are faced with shortages of their own. The rise in rice prices is attributed to poor harvests due to extreme weather, increasing demand of imports, hoarding caused by expectation of increased price rises and a lack of long-term agricultural investment. Producers have restricted exports as they try to protect their stocks and limit inflation, while importers have been hit hard. The ADB study finds that that fast and persistent increases in the cost of many Asian food staples since the middle of last year —with the price of crude oil surging to a 31-month high in March, are a serious setback for the region, which has rebounded rapidly and strongly from the global economic crisis.

This, of course, is part of the general surge in food costs worldwide. As a result, countries are not able to find viable substitutes. Severe weather in some of the world's biggest food exporting countries damaged supplies, with floods hitting Australia and Canada in 2010. Drought and fires devastated harvests of wheat and other grains in Russia and the surrounding region during the summer, prompting Russia to ban exports. According to US government estimates, wheat production is expected to be lower this year than in the last two years. Sugar production has failed to keep up with the growing demand coming from developing countries, pushing prices sharply higher. In Central America, lack of rain has damaged bean crops and caused the biggest individual price rises. In Honduras and El Salvador, the price of red beans, part of the staple diet in the region, has almost trebled in the past year.

The World Bank suggests encouraging food-producing countries to ease export controls, and to divert production away from biofuels production when food prices exceed certain limits. It also recommends targeting social assistance and nutritional programs to the poorest, better weather forecasting, more investments in agriculture, the adoption of new technologies and efforts to address climate change. Financial measures are also needed to prevent poor countries being subject to food price volatility.

# # #

About Pretium Ventures:

Pretium Ventures is a Hong Kong based investment firm that specializes in promoting successful growth of young companies. As a venture Capital firm Pretium Ventures is unique in their client centric approach to supporting the growth of businesses as well as their ability to cater to small to medium sized individual and institutional investors.

http://www.pretiumventures.com