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Sri Lanka set to suffer if wheat prices rise: ADB
19 Mar, 2012 18:02:33
Mar 19, 2012 (LBO) - Sri Lanka is one of the countries in South Asia whose poor would suffer if prices of commodities like wheat rise further, the Asia Development Bank (ADB) said in a new report.
It said targeted food subsidies would help South Asia cope with future food price spikes.

"A spike in the cost of food staples like rice and wheat could push tens of millions more people into extreme poverty in South Asia but food subsidies targeted at the very poorest in the region would help them cope with still-high prices," it said.

South Asia’s high population growth rates and the high number of people already living on or close to the extreme poverty line of 1.25 US dollars a day mean it is one of the most vulnerable regions in the world to food price shocks.

Spending on food already accounts for half the total budget of low-income households, the ADB report said.

The study said that a 10 percent rise in prices could push almost 30 million more Indians and nearly 4 million more Bangladeshis into extreme poverty.

Pakistan is also at risk, with the same price leap causing an additional 3.5 million more people to drop to or below the 1.25 US dollar-a-day income mark.

"Nepal and Sri Lanka would be less affected, although a further surge in wheat prices would be especially painful for Sri Lanka, which is completely dependent on imports of the staple and has already seen prices hit historical highs in recent years," it said.

The report – Food Price Escalation in South Asia – A Serious and Growing Concern - notes that after peaks in 2008 and 2011, prices of key food commodities have eased somewhat, although the rate of decline has been slower in South Asia than the international average.

In addition, the region suffers from higher overall food inflation rates than the rest of developing Asia, with food making up a bigger share of items measured by the consumer price index.

Short-term weather shocks and costlier oil account for some of the past price hikes.

But the study said rapid population growth, changing food consumption patterns linked to higher incomes, and stagnating agricultural output are more critical factors driving rising food demand and inflation.

Although governments in the region have taken steps to counter higher prices, some measures may not be helpful to neighboring countries.

"India’s temporary food export restrictions, for example, could have had adverse impact on prices in neighboring countries, as India is the world’s second largest rice producer," the ADB said.

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READER COMMENT(S)
3. sltk2004 Mar 20
If we are now in "Middle Income Emerging Markets" - our people are not so poor, we should be able to face this.
2. eat healthy Mar 20
Why should Srilankans suffer when the country is self sufficient in rice. Eating red and brown rice must be promoted over less nutrituos wheat. Besides, most srilankans have diabetes and high cholesterol. Just dump the wheat.
1. thalapathpitiye hemananda Mar 19
We should stop eating bread and wheat and eat rice. we are self sufficient