Getting out of reach
Photo: Munir Uz Zaman/ Drik News
THE higher prices of rice have rattled consumers and governments across Asia. Concerned by the problem of food security becoming worse, major importing countries have started looking for avenues to bring in more rice into their lands, while big producers are aiming to tame inflation by keeping more supplies at home to drive down domestic prices. In a continent where rice is a staple food item and accounts for more than 40% of the calorie consumption of individuals, meeting the consumers' demand while keeping its prices low has emerged as a major challenge. After three decades, the ghost of rice shortage and its spiralling prices have once again started to haunt Asian governments. Rice stocks in Asia last hit a low in 1976, when consumption rose and harvests dropped, mostly due to bad weather and insects. Now, in 2008, we are facing the same problem again. Although the latest figures on Asia's rice stockpile are not available, the US Department of Agriculture said that the world's rice inventories now stand at about 72 million tonnes, a record-low since 1976. This means the world only has stock to meet 17% of global annual consumption, compared with 35% eight years ago. This is certainly not good news for Asia, which consumes more than 80% of the rice produced in the world. Anxiety is running particularly high in the Philippines, the world's largest buyer of the grain. A few weeks ago, Manila said it wanted to buy 500,000 tonnes of rice after failing to buy a similar amount earlier in March. The Philippines is struggling to import up to 2.2 million tonnes this year, in what could be the biggest overseas purchase in a decade, to cover a production shortfall. The situation is similar in Bangladesh, where Cyclone Sidr and repeated floods have destroyed majority of the rice crops. While consumer nations such as the Philippines, Bangladesh, Indonesia, North Korea and Nepal fret over food security, big producers are aiming to tame inflation by keeping more supplies at home to drive down domestic prices. In Vietnam, consumer prices rose by nearly 20% this month, the highest in more than 12 years. In a bid to stabilise prices, Vietnam, the second largest rice exporter, will limit rice shipments to 3.5 million tonnes, down from 4.5 million tonnes last year, a government statement quoted Prime Minister Nguyen Tan Dung as saying. Hanoi imposed a limit for the first 10-month shipment last week. In India, wholesale price inflation is close to a 14-month high, posing a major policy challenge at a time when economic growth is slowing. New Delhi's response is to raise the minimum sale price for rice exports by more than 50%, effectively ending overseas sales of all but the highest grades. Cambodia, a small exporter, also announced an export ban on March 27. It is estimated that export restrictions have removed a third of rice traded in the international market, creating a shortage in supply. This short supply is, in turn, fuelling price hike. A recent Asian Development Bank report said prices of rice in the international market soared to $700 per tonne in March from $378 in December 2007. On April 3, the price of Thai rice, a global benchmark, jumped 30% overnight to an all-time high of $760 per tonne after Egypt, a leading exporter, imposed a formal ban on selling rice abroad in a bid to stabilise soaring prices at home. In Thailand, the world's top rice exporter, industry officials foresee prices rising to $1,000 a tonne. Experts have cited various reasons for this surge: less rice yields as a result of typhoons, cyclones and flooding in the Philippines, Bangladesh and Indonesia, outbreak of a deadly disease that destroyed crops in Vietnam, reduction of land allotted to rice farming, and the recent panic buying and hoarding. Worried by the rising prices, and fears of its shortage, consumers in Hong Kong are thronging to supermarkets to buy more rice. In the Philippines, consumers are flocking to buy up rations of government-subsidised rice, and in Bangladesh many arrive at the government-owned rice outlets early in the morning to secure a front spot in the line. It is a well-known fact that rice is a staple food item for 2.5 billion Asians. Many Asians can go without meat, pork, chicken, fish and vegetables for days, but they will consider it the worst kind of deprivation if their meal does not contain rice. In Asia, rice also accounts for more than 40% of the calorie consumption of most of its residents. Poor people spend a large proportion of their income for buying rice. Thus, the level of rice production and its prices are important factors in determining the progress made in the well-being and living standard of Asians. Given this, taming the high prices of rice has become a major concern for governments across Asia. Although governments are trying to solve the problem by extending subsidies or imposing price control mechanisms, these only provide short-term solutions. To avert similar problems in the future the governments must think of ways to increase the yields. According to the Food and Agricultural Organisation, rice production in Asia, which contributes to 90% of the global rice output, rose by an estimated 0.4% to 389.9 million tonnes last year. While in China and Indiathe world's largest and second largest rice producersproduction went up by a meagre 0.7% and 0.5%, respectively, to an estimated 127 million tonnes and 93.3 million tonnes. The governments should also funnel more funds into irrigation systems, seeds and crop management technologies. These can only provide a permanent buffer to the crisis we are currently facing. (With reports from The Straits Times, Philippine Daily Inquirer and The Daily Star.) © Asia News Network. All rights reserved. Reprinted by arrangement.
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