Food Price Hikes Hit Poor Hard says the ECLAC

from the IPS

We haven't had many stories on how the food crisis has effected Latin America. A conference is happening now held that discusses how to cvope with the crisis, and how to help the poor thru it.

"The countries have responded very well and very promptly, but obviously some are facing major difficulties, like nations in Central America that are not only net food importers, but oil importers as well," Alicia Bárcena, executive secretary of the Economic Commission for Latin America and the Caribbean (ECLAC), told IPS.

Bárcena avoided calling the present situation in Latin America and the Caribbean a "crisis", because ECLAC, a United Nations agency, estimates that the regional economy will grow by 4.7 percent in 2008 and by about four percent in 2009, thereby achieving seven consecutive years of growth.

However, she warned about the possible effects, particularly on the poorest segments of the population, of accelerating inflation, which has been increasing year on year.

Over the last year, the consumer price index (CPI), especially for foods, has increased by an average of 16 percent in most of the economies in the region, Bárcena said. CPIs have seen increases of between seven and 30 percent, depending on the country.

The real cost of basic products has increased by 140 percent over the last 25 quarters (six and one-quarter years) in a row, Bárcena said.

ECLAC forecasts, omitting the effects of any measures taken or planned by governments, indicate that if inflation rises by 15 percent, the poverty rate will increase by three percentage points, from 35 percent of the population in 2007 to 38 percent.

Bárcena opened the two-day seminar on "The Food and Energy Crisis: Opportunities and Challenges for Latin America and the Caribbean" Thursday, at the ECLAC headquarters in Santiago, with a presentation on food and fuel price volatility in the region.

"One of the goals of the seminar is for countries to compare their plans and policies, and for ECLAC to help on the technical aspects to facilitate early detection of potential economic and social impacts," she said.

Nils Kastberg, the regional head of the United Nations Children's Fund (UNICEF), said he was concerned about the food and "nutritional" security of Latin American children and young people in the present inflationary context.

There are fears that chronic malnutrition (low height for age), in particular, may increase, Kastberg said.

"Food prices will continue to rise until 2015 because of the levels of supply and demand," said Máximo Torero of the International Food Policy Research Institute (IFPRI), where he is head of the Markets, Trade and Institutions Division and coordinator for Latin America and the Caribbean.

"The region’s immediate response to the price hikes was protectionism," Torero told IPS.

"Central America, for instance, tried to create a regional grain reserve, which has dwindled away because experience demonstrates that it can't work. It's very difficult to generate food reserves and fix a stable price," he said.

"Many countries initially instituted price controls, which are a bad idea because they are not sustainable," he said.

"Gradually, countries have implemented better policies that are more market-oriented. They have begun to lower import tariffs and reduce local taxes so that consumers can maintain their purchasing power," Torero said.

"But what is still lacking is a stronger reaction in defence of the poorest sectors. A start has been made on reactivating conditional money transfer programmes, but the value of these is not keeping up with inflation. This is where I think faster responses are needed," he said.

Link to full article. May expire in future.