Rice price hike in BD much higher than int'l price: ADB

The Asian Development Bank has said Bangladesh's domestic rice price growth is higher than that of the international price which underpinned the localinflation.
The Manila-based multilateral lending bank, in a report, said between June 2010 and February 2011, the global rice prices increased by 16.8 per cent while domestic rice prices in Bangladesh went up by 21.4 per cent.
"For countries that import food, the extent of transmission from global to domestic prices is dependent on the exchange rate, trade policy, other policy measures, and the speed of adjustment," said the ADB report "Global food price inflation and developing Asia".
The report, released Monday, said as with the 2007-2008 episode, rising global food prices are getting transmitted into higher domestic food prices in developing Asian economies.
In recent months, food price inflation has reached double digits in Bangladesh which is stirring up general inflation, the ADB report said.
The Bangladesh Bureau of Statistics said Monday that the point-to-point inflation reached to 10.49 per cent in March this year, which was driven by the 13.87 per cent food inflation.
The "Global food price inflation and developing Asia" report of the Manila-based lender said rising global food prices are expected to affect growth and poverty incidence in developing Asia.
"If a 30 per cent increase in global food prices persists throughout 2011, GDP (gross domestic product) growth for some food-importing countries in the region could be choked off by up to 0.6 percentage points."
If a 30 per cent increase in world oil prices is added on top of the 30 per cent increase in global food prices, GDP growth could be reduced by up to 1.5 percentage points, the Asia-pacific lender said.
The ADB feared that considering that both international prices of food and crude oil have risen by more than 30 per cent in the first two months of 2011, such possibilities are real and cannot be ignored.
The lender has projected that a 10 per cent rise in domestic food prices in developing Asia, home to 3.3 billion people, could push an additional 64.4 million into poverty, or lead to a 1.9 percentage point increase in poverty incidence.
The ADB said the food price increases have been particularly pronounced since the middle of last year.
"From June 2010 to February 2011, global food prices increased by 40.4 per cent including by 85.9 per cent of sugar, 67.9 per cent of cereals, 65.9 per cent of edible oils, 13.2 per cent of dairy products and 11.2 per cent of meat."
For the two key staple cereals that rice price in the global market rose to $554.33 per metric tonne in February 2011 from just $474.60 per metric tonne in June 2010, reflecting a 16.8 per cent increase, it said.
Wheat prices in the international market rose to $362.00 per metric tonne from $181.4 per metric tonne during the same period, maintaining almost a two-fold increase, said the ADB.
In the near-term outlook, the ADB quoting the Food and Agriculture Organization (FAO) of the United Nations said global crop inventories, especially of cereal crops, are expected to fall this year on account of stock drawdown last year.
The FAO estimates that global cereal production would have to rise by 2.0 per cent, particularly for corn and wheat, to match the utilisation requirements for 2011-2012 and avert further stock drawdown on existing inventories.
"A continuing trend of high and volatile food prices is likely in the short term. The international price of wheat is expected to remain high, exacerbated by the ongoing drought in the major wheat-producing belt in China and extremely low global carry-over stocks."
ADB said winter plantings in major producing countries of the Commonwealthof Independent States are also lagging and unfavourable weather in the United States is hampering early crop development.
Prices of corn and soybean are likewise expected to rise, with the continued increase in demand for feeds and biofuel, the ADB said.
For rice, temporary tightness of export supplies, resulting from crop destruction brought about by flooding, has raised prices in Asia in recent months, despite the general decline in domestic coarse grain prices in developing countries, said the report.
Rice prices in many Asian countries could continue to follow an upward trend due in part to reduced projections of rice harvest as the effects of the La Niña weather condition persist.
"Moreover, tighter supplies of high quality wheat could lead consumers to substitute rice for the higher-priced wheat, putting additional pressure on global rice prices," said the Manila-based multilateral lending bank.

(Source: http://www.thefinancialexpress-bd.com/more.php?news_id=133919&date=2011-04-27)