Kuroda is against Thailand's idea of creating an Opec-like rice cartel [AFP]

The bank said at its annual meeting in Madrid, the Spanish capital, on Sunday that food prices could keep rising and stifle economic growth in the region.
 
Haruhiko Kuroda, the bank’s president, said: "The cheap food era may be over."

The ADB said new aid will come in the form of soft loans for the governments of countries hardest hit by the global food crisis, such as Bangladesh.

Kuroda said the bank does not approve of Thailand's idea of creating a rice-exporting cartel along the lines of the Organisation of Petroleum Exporting Countries (Opec), saying it is better to let market forces operate freely.
 
He declined to give an overall figure for the expenditure, saying it would depend on requests of governments.

But he said the amount would be "sizable, but not enormous".

Co-ordination problem
 
Cohen said people talk about cartels all the time, particulary when commodity prices rise.

"But it is more difficult than expected to try and co-ordinate such an operation," he said.
 
"Even Opec, when there are a much smaller number of oil-producing countries, they are reputed to have difficulty in policing the quotas of when prices go up."
 
The Manila-based ADB was created in 1966 to fight poverty in the Asia-Pacific region, and every other year holds its annual meeting in one of its 19 member countries that are outside the region.
 
This year it picked Spain, which joined in 1986.
 
Vulnerable poor
 
Asia is home to two-thirds of the world's poor, and nearly 1.7 billion people in the region live on $2 a day or less.

Global food crisis

UN says soaring price of basic foods such as rice and cereals could affect around 100 million of world's poorest people

Global rice stocks have halved since hitting a record high in 2001 while demand is continuing to rise

In Asia rice prices have almost tripled this year alone

Financial speculators, rising populations, floods, droughts, increased demand from developing countries, and removing crops from the food chain to produce biofuels have been cited as factors

Price rises have led producing nations to enforce export restrictions, further putting the squeeze on supply, especially in countries relying on imports

Higher food costs mean higher inflation, which will reduce consumption, savings and investment. If governments raise interest rates to control inflation, this could reduce demand and trigger an economic slowdown, the ADB said in a report.

It estimated a food price rise of 50 per cent could cut growth in Asian gross domestic product by 1.05 percentage points in 2008 and lower growth in 2009 as well.

Many countries in the region are grappling with the crisis by imposing price controls or bans on food exports, but the bank says this can backfire by discouraging farmers from planting, thus reducing supplies and raising prices.

"Food-specific aid is a better idea," Kuroda said.

"We believe targeted interventions to protect food entitlements of the most vulnerable and poor are more effective to mitigate the immediate impact of rising food prices".

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