Food and fuel price shocks increased number of Asia-Pacific’s sufferers

HIGHER food prices in Asia and the Pacific pushed up the number of undernourished people in the region from 542 million in 2003 to 2005, to 583 million in 2007.

The additional food price increases in the first half of 2008 and the marked slowdown in economic activity in the second half are likely to have increased the number of the undernourished even more.

In the absence of long-run policies to address these imbalances in fuel and food markets, episodes of soaring commodity prices can recur, pushing up domestic inflation rates, hurting the poor and putting pressure on budget deficits.

Given the interconnections between energy and food and financial markets, a comprehensive policy approach is needed.

Since 2000, for instance, crude oil and food prices have become increasingly linked. Thus, policies aimed at moderating the demand for crude oil, such as promoting energy efficiency, are conducive to improved energy security and food security, as well as the mitigation of climate change.

An excessive degree of liquidity in international financial markets led to a growing presence of financial investors in commodity markets, and excessive speculation played a role in exacerbating commodity price booms and busts.

Policies to promote the stability of international financial markets will contribute to the stability of international commodity markets.

In the absence of social protection programs, food price increases leave the poor with limited, often harmful coping mechanisms—such as reducing the number of meals, eating less nutritiously, selling livestock and other assets, or taking children out of school.

Some of these coping mechanisms may alleviate hunger temporarily, but they may also lead to malnutrition, harm livelihoods and put children’s prospects at risk.

The coverage of basic social protection programs is very low in developing countries in Asia and the Pacific.

Only 20 percent of the population has access to health care assistance; only 30 percent of the elderly receive pensions; and only 20 percent of the unemployed and underemployed have access to labor market programs such as unemployment benefits, training, or public works programs, including food for work programs.

Addressing these deficiencies is as important as taking measures to reduce the likelihood of a future food price crisis.
Source: ESCAP