More Filipinos to get poorer–ADB

By Darwin G. Amojelar Reporter

THE soaring domestic food prices will increase the number of poor
Filipinos and will spoil the government’s fiscal situation as well as the domestic economy, the Asian Development Bank (ADB) warned.

In Madrid, the bank’s governing body met Monday to discuss new strategies to fight poverty and better serve its members in the Asia Pacific region.

In a new report titled, “Soaring Food Prices: Response to the Crisis,” the Manila-based lender said food price inflation may have seriously eroded the purchasing power of the poor, increasing the severity of food deprivation and malnutrition.

To determine the impact of high food prices in the Philippines and Pakistan, the ADB used household expenditure survey data in three different scenarios: a 10-percent; 20-percent; and 30-percent hike in food prices.

“The results indicate that poverty will be worsened in terms of the number of absolutely poor as measured by the national poverty line,” the report said.

In the Philippines, a middle-income country, the head count of poor Filipinos rises by 2.72 million, 5.65 million, and 8.85 million under the three scenarios of 10-percent, 20-percent and 30-percent increases in food prices.

As of 2006, the number of poor Filipinos totaled 27.6 million, 16 percent more from the 23.8 million recorded in 2003.

In Pakistan, a low-income country, the head count of poor people rises by 7.05 million, 14.67 million, and 21.96 million, respectively.

For the average Filipino, food expenses is about 40 percent of total expenditure, while Pakistanis spend about 50 percent of total expenses on food.

Cost of living to decline

In a separate study titled, “Food Prices and Inflation in Developing Asia: Is Poverty Reduction Coming to an End?,” estimates by the ADB suggest that if food prices go up by 10 percent, the average standard of living of the people in the Philippines and Pakistan will decline by 4.16 percent and 4.84 percent, respectively.

“But rising food prices affect people at varying income levels differently. Higher prices put upward pressure on the cost of living and thus lower the overall standard of living,” the ADB said.

The report said that during the one-year period ending March, wheat export prices increased by 130 percent, rice by 98 percent, and maize by 38 percent.

In March alone, rice prices have doubled. Therefore, the price impacts have been most pronounced in import dependent countries like the Philippines.

During the past year, the ADB said domestic rice prices doubled in Bangladesh and Cambodia, and increased by 70 percent in Afghanistan, 55 percent in Sri Lanka and 40 percent in the Philippines.

It added that the policy responses, like export bans and price floors, of key rice-exporting countries including the People’s Republic of China, Pakistan, Vietnam and India have increased price volatility and uncertainty in the international rice market.

The bank said the diversion of cereal use from food to biofuel has tightened wheat, corn, and other grain supplies. Also, conversion of agriculture lands for urban or industrial uses has contributed to the soaring food prices.
–With Xinhua

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