BBC NEWS | South Asia | Asian states feel rice pinch
http://news.bbc.co.uk/2/hi/south_asia/7324596.stm
Asian states feel rice pinch
Friday, 11 April 2008
Asian countries have been struggling to cope as the cost of rice has reached record levels.
The price of the staple crop has risen by as much as 70% during the last year, according to the UN Food and Agriculture Organisation (FAO), with increases accelerating in recent weeks.
Shortages have begun to hit some importing countries.
Factors contributing to the price rise include:
• Poor harvests resulting from extreme weather
• A rise in demand in some rice-importing countries,
where populations and incomes are growing
• The expectation of further price increases - resulting in hoarding
• Low stockpiles and a long term lack of agricultural investment
The spike is also part of a general surge in food costs worldwide, so the option of switching to cheaper foods is often not available.
Producers including India, China and Vietnam have restricted exports as they try to protect their stocks and limit inflation.
Importers such as Bangladesh, the Philippines, and Afghanistan have been hit hard.
Prices are expected to remain volatile, though output is likely to grow later this year as farmers in Thailand and Vietnam plant additional crops.
INDIA
India is the second largest rice grower in the world behind China. With rice the staple food for 65% of the country's one billion plus people, much is consumed domestically.
But prices have been soaring - a shopkeeper in Delhi told the BBC that the cost of one variety had increased from 12 rupees (29 US cents) per kilogram to 16 rupees (39 cents) in the last two months.
Rice prices in the capital rose by 20% last year.
The government has announced a total ban on exports of non-basmati rice, in a bit to curb rising food prices, which have helped push inflation to a 13-month high.
The price for basmati rice, meanwhile, has been raised to $1,200 per tonne to discourage exports.
Officials say as yet there is no crisis - India has more than enough reserves to feed its population.
They also say India will honour its commitments to export rice to neighbouring Bangladesh.
But the International Rice Research Institute says that the sustainability of rice farming in India and beyond is threatened by overuse of fertilisers and soil health.
Stocks have come down over the last three years as agricultural growth has failed to match the rest of the economy.
And because of the low purchasing power of India's poor, even a small increase in prices can cause a sharp fall in real incomes.
BANGLADESH
Spiralling rice prices have left the people of Bangladesh facing their worst food shortages since the major famine of 1974.
Over the last year, prices have nearly doubled to about 35 taka (50 cents), while there has been no corresponding increase in wages.
Hundreds of poor families are now surviving on one meal a day, and spending 70-80% of their budget on food. The problem is most acute in urban areas where aid agencies say they are very concerned about infant malnourishment.
Local factors have contributed to the price rise. Bangladesh has been hit by severe flooding twice in the last year and a devastating cyclone in November.
The government is giving rice away to 2.6 million people and supplying some families at discounted prices.
It has had to import four million tonnes of rice from India over the last six months - more than double the usual amount.
But the government's critics say it has made matters worse with an anti-corruption drive that has led to the closure of many unofficial rice supply outlets closed down.
PHILIPPINES
Once self-sufficient in rice, the Philippines is listed by the US Department of Agriculture as the world's top importer of milled rice for 2007, ahead of Nigeria, Indonesia and Bangladesh.
Over the past 20 years or so, the country lost nearly half of its irrigated land to rapid urban development.
Domestic demand has risen as the population has grown, pushing up prices.
With rice stocks low, the government has been negotiating with neighbouring countries to secure imports, signing a deal with Vietnam and working for another one with Thailand.
Fears of public unrest have been growing. Communist guerrillas recently burnt a rice trader's vehicles in the central island of Panay.
President Gloria Arroyo has asked authorities to crack down on hoarders. Officials have said they could be charged with economic sabotage - a crime that carries a life sentence.
There have also been efforts to reduce consumption. Some of the country's fast-food chains are offering half portions of rice at the government's request. The government has also asked the public to save leftover rice.
Troops have been called in to protect deliveries of rice to poor areas, while farmers have reportedly begun guarding their crops.
Some government critics say it has not done enough, and members of the influential May First Labour Movement have been holding small-scale demonstrations in various parts of the country.
But others say the Ms Arroyo has overreacted, creating unnecessary panic.
THAILAND
Thailand has long been the world's largest exporter of rice, well ahead of Vietnam and the US.
It has not yet placed any restrictions on exports, and has denied reports that it is considering taking this step.
However, some rice millers and traders who deal on forward contracts have been suffering, after being caught out by price fluctuations.
Exporters have even complained that they would prefer to have stable prices than high prices.
Some millers have hoarded rice in an attempt to earn higher profits later on, pushing prices higher still as they restrict supply.
The government has released some of its 2.1 million tonnes of stockpiled rice in an attempt to contain inflation.
It has also said it will enforce a rule that exporters set aside at least 500 tonnes of rice to prevent shortages.
Rice prices increased by more than 50% last year and have doubled since the beginning of 2008.
While in some countries rice consumption has risen with prosperity, Thais have been eating a greater variety of foods and less rice as they have become wealthier.
CHINA
Chinese consumers have been have been eating less rice as their income has risen, according to the FAO.
Instead, they have been switching to meat and dairy products.
But the government, highly conscious of social or political tensions caused by food inflation, has moved to protect consumers by restricting exports.
Chinese Prime Minister Wen Jiabao said this week that China has an "abundant" supply of rice to feed its population of more than 1.3 billion.
China had stockpiled about 40-50 million tonnes of rice, he said.
Though China is not one of the top rice exporters, export restrictions can have a big impact on importers including North Korea, which buys rice from China at very low prices as it tries to cope with frequent food shortages.
Though short term supplies are secured, there are concerns that urbanisation and industrial development are putting pressure on farming.
JAPAN
Rice is thought to have been produced for more than 2,500 years in Japan, where it was once seen as so important that it was worshipped as a god.
Instead of importing rice, Japan heavily subsidises its rice farmers, paying them as much as four times the market price and restricting imports.
This policy is defended by a farming community with considerable political weight, and many Japanese agree home-grown rice tastes best.
Food security is seen as politically important and the country keeps a large stockpile of rice - even though it is probably wealthy enough to buy on the international market even if prices continue to rise.
Its scientists are already looking for varieties that will be resistant to higher temperatures caused by climate change.
Japan trades relatively small quantities and has little impact on the international market.
BBC SPECIAL REPORT - Food price crisis
