Already, rising food and fuel prices over the past two years have pushed some 100 million people back into poverty, living below $2 (€1.30) a day, said World Bank Managing Director Juan Jose Daboub.
Food costs are on average more than 2 1/2 times higher now compared to early 2002, with no signs of relief in sight — especially for rice, Asia's staple food, which recently broke above a record $1,000 (€650) per metric ton, he said.
Soaring food prices hit the poor especially hard because they spend a large percentage of their income to feed themselves.
Daboub blamed the spike in rice price on a combination of factors including growing demand, rising fuel prices, cuts in agriculture funding, increasing use of food crops for biofuels, distorting subsidies and trade barriers, financial speculation and bad weather.
"We believe this phenomena is here to stay, not a few weeks or a few months but it will be two to three years," he said at a lecture on the global food crisis in a Singapore university.
"If food prices doubled over the next three years, we will go back approximately seven years in terms of poverty eradication. We will be where we are seven years ago," he warned.
Fallout from price rises have already sparked food riots in Haiti, Egypt and Somalia.
Daboub rejected calls to set up a rice cartel in Asia to fix the price of the staple, saying manipulation of prices may bring temporary benefits but could lead to misallocation of resources in the long-term.
Thailand earlier this month dropped plans to create a Southeast Asian rice cartel following protests from senators in the Philippines, a major importer, as well as some Thai rice exporters.
Daboub said the World Bank is in talks with four rice producing nations — China, Japan, Thailand and Vietnam — to persuade them to jointly release an additional 1 million tons of the grain to ease price pressure in the global market.
Only 7 percent, or some 30 million tons, of global rice production are currently exported, he said.
Asked about the role of genetically modified crops to alleviate the global food crisis, he said it could be considered as long as it doesn't create further price distortions through fiscal incentives given to produce them.
"There is no magic solution," Daboub said.
"I do think concerted action is necessary and called for...the key element in any longer-term solution will be to increase global food production. There is no temporary solution."
The World Bank is pushing for a new global food policy, which includes plans for safety nets for food security and immediate assistance for the poor in the short-term as well as longer-term policies to boost rice productivity, Daboub added. - AP