Reuters : Greed behind food price rises: development bank head

Wednesday, May 07, 2008

Greed behind food price rises: development bank head

By Ingrid Melander | May 6, 2008

BRUSSELS (Reuters) - The food price crisis is caused largely by greed and speculation rather than food shortages, the head of Southern Africa's development bank said on Tuesday.

Spiraling food costs -- called a "silent tsunami" by the World Food Program -- have ignited fury and a rash of protests from Haiti to Somalia to Bangladesh. Exporting countries have curbed shipments to ensure domestic supplies and tame inflation.

"These increases in food prices are not the consequence of food shortages, it's the consequence of human greed that is putting at risk the lives of millions of men, women and children," Jay Naidoo told Reuters.

"There are companies that are making super profits on this issue."

The root causes of the more than 40 percent rise in food prices in the last year are disputed. Experts point to strong demand from Asian emerging markets, adverse weather in some producer countries and increased use of biofuels.

The Asian Development Bank (ADB) said it would give up to $500 million in emergency loans to regional economies hardest hit by the crisis and double investment in the farm sector to $2 billion in 2009.

After four days of talks in Madrid, governments remained split on whether they should use export bans and market intervention to ensure 1 billion poor Asians living on less than $2 a day do not slip back into hunger and malnutrition.

"Trade measures or price controls are not efficient ways to combat the food crisis or food price inflation. It distorts the market and could exacerbate the situation in the international grain market," ADB President Haruhiko Kuroda told Reuters.

"... the best way to address the immediate difficulty is to strengthen social safety nets through targeted support for the poor rather than generalized food subsidies or trade measures or price controls."

Naidoo, of the Development Bank of Southern Africa, said on the sidelines of a conference on malnutrition in Brussels that governments and world bodies should take concerted action to control surging food prices.


Thai rice prices fell around 10 percent on Tuesday after importers taking their cue from Manila's decision to scrap a large tender held back on purchases.

Five Thai exporters quoted prices for 100 percent B trade white rice, the world's benchmark, at between $900 and $920 a tonne, free on board. That is down from last week's $990-$998 a tonne.

Calming nerves further, Thailand, the world's biggest rice exporter, backed off its proposal for an "OPEC-style" rice cartel. "If Thailand was going to set up a rice cartel to fix the price, that would worsen food security," Foreign Minister Noppadon Pattama told reporters.

On Monday, the Philippines, the world's top rice importer, scrapped its largest rice tender of the year.

Vietnam, the world's second-largest rice exporter, said it was considering imposing a duty on rice exports because it wants to save more of the grain for domestic consumption.

In Africa, Democratic Republic of Congo cut import taxes on staples including "rice, maize, wheat flour, sugar, vegetable oil, powdered milk, cement, mackerel, chicken, beef ... and equipment necessary for production," according to a government statement published on Tuesday.

Traders said the fall in prices could be limited if Myanmar, which has committed rice exports to neighboring countries, decides to halt overseas sales and instead starts to import the grain after being hit by a devastating cyclone.

Some of Myanmar's rice customers are expected to turn to Thailand for supplies after the military-ruled country was lashed by Cyclone Nagris. The storm killed up to 22,500 people and ripped through Myanmar's Irrawaddy delta, its main rice growing area once dubbed the "rice bowl of Asia".

(Reporting by Apornrath Phoonphongphiphat in Bangkok, Sebastian Tong and Yoo Choonsik in Madrid; additional reporting by Joe Bavier in Kinshasa; editing by Robert Woodward)

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