Targeted food subsidies could help South Asia cope food price spikes

MANILA - A spike in the cost of food staples like rice and wheat could push tens of millions more people into extreme poverty in South Asia but food subsidies targeted at the very poorest in the region would help them cope with stillhigh prices, says a new report by the Asian Development Bank (ADB).

South Asia's high population growth rates and the high number of people already living on or close to the extreme poverty line of $1.25 a day means it is one of the most vulnerable regions in the world to food price shocks. Spending on food already accounts for half the total budget of lowincome households, it said according to a media statement issued by the Bank last week. "Subsidizing the cost of a basic meal for the poorest and most vulnerable in places like India means the help goes to those who need it the most without putting an excessive burden on government finances," said Hiranya Mukhopadhyay, an economist in ADB'S South Asia Department and an author of the report.

The study says that a 10% rise in prices could push almost 30 million more Indians and nearly 4 million more Bangladeshis into extreme poverty. Pakistan is also at risk, with the same price leap causing an additional 3.5 million more people to drop to or below the $1.25-a- day income mark.

Nepal and Sri Lanka would be less affected, although a further surge in wheat prices would be especially painful for Sri Lanka, which is completely dependent on imports of the staple and has already seen prices hit historical highs in recent years. The report - Food Price Escalation in South Asia - A Serious and Growing Concern - notes that after peaks in 2008 and 2011, prices of key food commodities have eased somewhat, although the rate of decline has been slower in South Asia than the international average. In addition, the region suffers from higher overall food inflation rates than the rest of developing Asia, with food making up a bigger share of items measured by the consumer price index.

Short-term weather shocks and costlier oil account for some of the past price upside but the study says rapid population growth, changing food consumption patterns linked to higher incomes, and stagnating agricultural output are more critical factors driving rising food demand and inflation.

Although governments in the region have taken steps to counter higher prices, some measures may not be helpful to neighbouring countries. India's temporary food export restrictions, for example, could have had adverse impact on prices in neighboring countries, as India is the world's second largest rice producer.

Long term, governments must step up support for agricultural research to spark another "green revolution" to lift output and help develop crops more resistant to weather extremes. More investment in infrastructure, such as irrigation systems and farm-to-market roads to improve distribution and reduce post-harvest losses is also essential.

The People's Bank (PB) says it has posted 'remarkable' results for the financial year 2011 adding that this was due to "the unwavering commitment on the part of the bank to sustain and improve on its key performance indicators in a consistent and progressive manner".

The group reported 'exceptional PBT (pre-tax profit) of Rs. 21 billion in FY 2011 - the highest ever recorded in the banking industry to-date.

In a statement, the bank said it experienced a substantial increase in its gross interest income which expanded by 10% whilst its interest expenses increased only by 3.5% during the period under review.

Stringent cost management initiatives and budgetary control enabled the bank to reduce its overall overheads by 4.5% over 2010. This, along with growth in fee-based income enabled the bank to record a post-tax profit of Rs 10.2 billion, up 95% over the previous year's figure of Rs. 5.2 billion.

Bank deposits, influenced by the increase in rupee savings, rose to Rs. 540 billion, 16.8% over the previous year's figure. The fixed deposits segment which represents a significant portion of the deposit portfolio also grew by 18%.

The bank's contribution by way of taxes, levies and dividends stood at Rs. 12.5 billion, an increase of 25% from 2010. "This amount incidentally is the highest ever contribution made by any single bank to state coffers in the history of the banking industry," the statement said.

Coca- Cola Beverages Sri Lanka recently hosted the Advisory Council for Environment & Sustainability of the Coca-cola Company for India and South West Asia. The Committee visited the Coca- Cola Beverages Sri Lanka bottling plant to review business operations and sustainability initiatives taken by Coca- Cola Beverages Sri Lanka ( CCBSL) towards being a responsible corporate in the Country. The advisory committee also met with partners and local government authorities. The visit culminated with a visit to Ananda College, Biyagama, ( previously known as Yabaraluwa Vidyalaya, Malwana) a school in the vicinity of the bottling plant to gain understanding on how CCBSL has supported the community in Biyagama, the company said in a media statement.

Crisis-hit Maldives says drop in tourist arrivals in Feb

Monthly tourist arrivals in the neighbouring Maldives fell for the first time in February last month with the country struggling to recover from an ongoing political crisis.

February arrivals fell 4.7% to 83.252 from 87,392 in the same 2011 month when arrivals grew by 13.4% year-onyear against February 2010, according to official figures released this week.

The country's capital Male has been rocked by almost daily protests and clashes between opposition supporters and the Police, ever since President Mohamed Nasheed resigned on February 7. Arrivals from China, the country's biggest source market, was the worst affected with a 34.8% drop to 12,237 while earlier second-placed UK eased by 6.8% to 9,006. France took over the UK position as the second highest source market gaining by 4.9% to 9,742.

German arrivals also rose by 25% to 8,591 among the top-end markets.travel agents handling the Chinese market have said arrivals were affected because charters from there have not resumed since being suspended after the crisis broke out.

"Unlike western travellers, many who are repeats and familiar with the geography of the Maldives, the Chinese are mostly first-time travellers to the country and believe the whole country is affected by the unrest," one agent said.maldivian authorities have repeatedly advised travellers that the situation is calm in the resorts and visiting Male is also safe.