MADRID, SPAIN -- The Asian Development Bank (ADB) has announced emergency funding to help poor countries struggling with soaring food prices and warned these could keep rising and stifle economic growth in the region.

"The cheap food era may be over," ADB president Haruhiko Kuroda told a news conference on Saturday in Madrid where the bank was holding its annual meeting.

The 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 declined to give an overall figure for this expenditure, saying it would depend on requests that governments would make. He said the amount of the emergency aid would be "sizable, but not enormous."

US President George W. Bush earlier responded to the world's rising food prices by asking Congress to approve US$770 million in new global food aid for the coming fiscal year.

Many Asian countries, however, are grappling with the crisis by imposing price controls or bans on food exports. The ADB said such measures could backfire by discouraging farmers from planting, thus reducing supplies and raising prices.

Better idea

Food-specific aid is a better idea, according to Kuroda.

"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," he said.

Kuroda also said the ADB did not favor Thailand's idea of creating a rice-exporting cartel along the lines of Organization of Petroleum Exporting Countries (Opec), saying it is better to let market forces operate freely.

Underscoring the importance of the emergency aid, Kuroda said prices of rice had nearly tripled in just four months.

Prices for the benchmark Thai variety of rice, a food staple across much of Asia, have surged to about $1,000 a ton, up threefold from the last ADB annual meeting held in Japan one year ago.

Social unrest

At a meeting of the ADB on Sunday, Japanese Finance Minister Fukushiro Nukaga warned that soaring prices of food staples could lead to social unrest in Asia.

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. Asia's poor are particularly vulnerable to rising prices for staples such as rice because 60 percent of their spending goes to food.

"The recent hike in the price of rice will hit Asian countries particularly hard. The ones who are most affected are the poorest segment of the population including the urban poor," Nukaga said.

"It will have a negative impact on the living standards and also affect their nutrition. Such a situation may lead to social unrest and therefore safety nets addressing the immediate needs of the poorest are needed," he added.

Soaring prices for staples have been stoked by higher fuel costs, unpredictable weather and greater demand from emerging powerhouses such as India and China.

Rising use of biofuels, trade restrictions, poor harvests and increasing transport costs have also been blamed for the skyrocketing prices of staples.

Global food prices have nearly doubled in three years, sparking riots last month in Egypt and Haiti, protests in other countries and restrictions on food exports in Brazil, Vietnam, India and Egypt.

Higher inflation

Higher food costs mean higher inflation, which will reduce consumption, savings and investment. And if governments raise interest rates to control inflation, this could reduce demand and trigger an economic slowdown, according to an ADB report.

The ADB estimates a food price shock of 50 percent could cut real growth in Asia's gross domestic product by 1.05 percentage points in 2008 and lower growth in 2009 as well.

While stocks of rice are the lowest they have been in a decade, the real problem is one of prices-the ability of poor people to buy food, according to the ADB.

The Manila-based bank 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.

Agenda of meeting

At this year's meeting, the bank will discuss how governments can help these people, including measures such as targeted aid, and over the long term with greater investment in agriculture and infrastructure, like irrigation systems, to increase production.

The ADB wants developed countries to stop paying subsidies for production of biofuels, saying it makes staples more expensive.

The meeting of the ADB board begins in earnest on Monday and will bring together about 3,000 delegates, including finance ministers, academics and members of other multilateral development agencies.

Asia has been experiencing torrid economic expansion-8.7 percent last year-and the ADB forecasts GDP growth at a still-robust 7.6 percent in 2008 despite slowdowns in the United States and elsewhere.

But for Asia, this has come with inflation now running at 5.1 percent-the highest in a decade-and disregard for the environment amid go-go development and industrialization.