ISAS Insights

Agricultural commodity prices have reached nosebleed levels in recent months.1 The impact of the ongoing agflation across the world, especially on the low and fixed income groups, is so severe that the World Food Programme has described the phenomenon as a 'silent tsunami'.2 The current food shortage is also seen as the first truly global food crisis since World War II. The Asian Development Bank thinks that one billion people in Asia are seriously affected by surging global food prices.3 As there is a direct nexus between access to food and poverty, it is feared that soaring food prices will push more people under the poverty line and this could jeopardise the progress towards the millennium development goals. The World Bank believes that the current food crisis imperils 100 million people in poor countries.4 Nevertheless, the World Bank's explanation of extreme poverty (people who earns less than US$1 a day) underestimates the actual number of poor people in the world, as the sliding United States dollar and higher food and energy prices have made the definition somewhat obsolete. However, there are some winners of the current soft commodity boom too. Net food exporting countries have been enjoying improved terms of trade.