Market: ADB economist

Paust, executive director of the bank, told a conference that price controls and export-import intervention would cause future scarcity and prolong price volatility.

While they should take action against hoarders, governments should not distort economic incentives. This would exacerbate the food crisis, which hurts billions of people and will lead to greater social divisions, unrest and political instability, he said.

At the Ninth Asian-European Editors' Forum on "The World Food Crisis: Effects on Asia - and Solutions", he said the continuing crisis would undermine the gains in poverty reduction, education and health as well as political, social and economic stability.

The seminar, organised by the Konrad Adenauer Foundation and The Nation, drew about 50 people, including editors and journalists, from Asia and Europe.

In the short term, governments should quickly calm markets by initiating ad hoc social protection programmes for the poor, Paust said. Governments should start and expand nutrition programmes focused on school feeding, which is an essential incentive for higher enrolment and better primary school rate.

The establishment of an effective regional public-grain stock is also needed.

For the medium and long term, governments should strengthen social safety nets through targeted income support for the poor rather than generalised food subsidies or trade measures and price controls.

The intensifying search for environmentally and socially adapted plants is one of the mechanisms to deal with this crisis situation, but governments should avoid bottlenecks with monocultures, mass production and excessive use of pesticides.

Paust also suggested making agriculture a political priority and increasing investment in rural infrastructure and market development.

The food crisis is hitting the poor hard, he said. Since mid-2007, cereal prices have skyrocketed - by 114 per cent for wheat, 105 per cent for rice and 41 per cent for corn.

Similar trends have been observed for other major food groups, including diary products and edible oil.

A 100-per-cent increase in food prices, for example, would increase the number of the poor in the Philippines and Pakistan by 23 million and 60 million, respectively. This would lead to lower school attendance, as many poor parents cannot afford the cost of tuition.

Ammar Siamwalla, acting president of the Thailand Development Research Institute, came up with a comforting message. As a rice expert, he believes the price of the staple will not rise any further.

"There is no reason why the rice price should stay at a high level. The volatile rice price at the moment is from lower stocks.

"As far as I'm concerned, the price should decline. The only factor that might impact the rice price is the Myanmar [Burma] situation," he said.