MADRID, Spain - The Asian Development Bank announced emergency funding yesterday to help poor countries struggling with rice prices that have nearly tripled in four months.
The aid will come in the form of "sizable" soft loans for countries hardest hit by the global food crisis, such as Bangladesh, bank president Haruhiko Kuroda said, declining to provide exact figures. But he warned that even after the current crisis passed, prices might keep rising.
"The cheap-food era may be over," Kuroda told a news conference in Madrid, where the bank is holding its annual meeting.
Asia is home to two-thirds of the world's poor, and nearly 1.7 billion people in the region live on $2 a day or less. Asia's poor are particularly vulnerable to rising prices for staples such as rice because 60 percent of their spending goes toward food, and the figure rises to 75 percent if fuel costs are included, the bank said.
Many countries in Asia are grappling with the crisis by imposing price controls or bans on food exports - a tactic the bank says could backfire by discouraging farmers from planting, thus reducing supplies and raising prices.
"We believe targeted interventions to protect food entitlements of the most vulnerable and poor are more effective to mitigate the immediate impact of rising food prices," Kuroda said.
He also said the bank did not like Thailand's idea of creating a rice-exporting cartel along the lines of OPEC but preferred to let market forces operate.
The Manila, Philippines-based Asian Development Bank was created in 1966 to fight poverty in the Asia-Pacific region, and every other year holds its annual meeting in one of its 19 member countries that are outside the region. This year it picked Spain, which joined in 1986.
The meeting's 3,000 delegates, including finance ministers, academics, and members of other multilateral development agencies, are discussing targeted aid, and investment in agriculture and infrastructure, such as irrigation systems to increase production.
On Friday, the bank secured $11.3 billion from member countries for the next four years to replenish a development fund that caters to the region's poorest countries.
Delegates also will discuss a newly approved long-term plan called Strategy 2020 to include a greater emphasis on regional cooperation and integration, and environmentally sustainable growth.