ECLAC warns of severe poverty in region if food crisis not solved

BRIDGETOWN, Barbados, April 24, 2008 – A senior official of the Economic Commission for Latin America and the Caribbean (ECLAC) has warned that unless urgent measures are taken to reduce the effects of rising food prices, the cases of extreme poverty will rise in Latin America and the Caribbean.

Executive Secretary José Luis Machinea said that the steep and persistent rise in international food prices has been particularly hard on the poorest in the region, worsening income distribution.

ECLAC has estimated that a 15 per cent rise in food prices will increase indigence by almost three points, from 12.7 per cent to 15.9 per cent. This means that elevating food prices will lead another 15.7 million Latin Americans to destitution and a similar number will also fall under the poverty line, the Commission noted.

However, according to the ECLAC research, if household incomes were to go up by 5 per cent, similar to the average inflation rate in the region, nearly 10 million people would still become indigent due to price hikes, and a similar number would increase the ranks of the poor.

“This is a dramatic situation for a large number of people,” Mr Machinea said.

The ECLAC data reveals that the scenario worsens when rising fuel prices are included in the picture, as they push up the price of transportation and public utilities.

“In this context, it is a priority to implement and/or maintain policies focused on diminishing those effects,” Mr Machinea pointed out.

He recommended taking measures to buffer food price increases in domestic markets, including reducing tariffs and/or consumer taxes, and/or implementing initiatives to improve income, including subsidies directed at certain sectors, or raising existing subsidies.

Noting that the high food prices “are here to stay”, the ECLAC Executive Secretary suggested that countries design medium and long range proposals to increase supply and productivity in a sustainable manner, as well as maintain specific policies focused on low-income sectors.

He also urged developed countries, and mid-income net food exporters, to make an exceptional contribution to programmes and agencies such as the United Nations World Food Programme, which can deliver emergency aid to populations at risk.

International food prices have been rising over the past few years, but price increases have been particularly steep in the past 12 months.