ADB Readies Regional Fund For Rice Crisis
By Daniel Wools
“The cheap food era may be over,” the bank’s president Haruhiko Kuroda told a news conference here, where the bank was holding its annual meeting.
The new aid will come in the form of soft loans for the governments of countries hardest hit by the global food crisis, such as Bangladesh.
Kuroda declined to give an overall figure for this expenditure, saying it would depend on requests governments make. He said the amount would be “sizable, but not enormous.”
He said the bank had also secured $11.3 billion in fresh development funds for lending to developing economies over the next four years.
“The generous contribution of donor nations will help developing Asia-Pacific countries meet Millennium Development Goal targets…” Kuroda said.
In Singapore, meanwhile, soaring rice prices were less likely to cause instability in China, India and other major Asian economies because they were buffered by domestic production of the cereal, Minister Mentor Lee Kuan Yew said.
“I do not see rice as a big issue for the Asian countries,” Lee said.
The Philippines might be more prone to civil disturbances because of its need to buy rice to boost its stockpiles. Even so, “the Philippines should be able to manage this,” Lee said.
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 were particularly vulnerable to rising prices for staples such as rice because 60 percent of their spending went toward food, and the figure rose to 75 percent if fuel costs were included, the bank said.
Kuroda said prices of rice, for instance, had nearly tripled in the past four months.
Higher food costs meant higher inflation, which would reduce consumption, savings and investment. And if governments raised interest rates to control inflation, this could reduce demand and trigger an economic slowdown, the bank said in a report.
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What else next and where else next will the world's speculative investors channel their overwhelming wealth?
Poor countries should be careful not bite the bait. Read between the following lines:
He (Kuroda) said the amount would be “sizable, but not enormous.”
"Higher food costs meant higher inflation, which would reduce consumption, savings and investment. And if governments raised interest rates to control inflation, this could reduce demand and trigger an economic slowdown", the bank said in a report.
Did you realize that high costs of goods can also be caused by another factor other than these two natural factors; shortage of supply and/or high demand of goods?
Costs of goods can artificially skyrocket when there is excessive speculative investing happening which is mainly driven by profiteering and not naturally driven by the normal market interaction of supply and demand.
In the face of global crisis, quick-gain-minded speculative investors with plenty of "hot investment money" are in frantic search of "sure" investments. They thrive in times of crisis because they pinned their hope in being able to make huge profits by taking advantage of an expected rise or fall in the prices of commodities -- especially the very basic ones; shelter, fuel, food, etc.
Since the "shelter bubble" is bursting already, they move to other commodities and are now heavily engaged in fuel, while some of them have already started speculating on food -- thus the prices of fuel and food disproportionately increased abnormally in spite of no corresponding significant shortage in their supplies.
In some sense, these type of investors are "gamblers". Beware of these "gamblers".