Global food crisis looms as Asia’s rice bowl empties and world price soars

Scotsman

THE crisis over rice showed no signs of easing yesterday as the price of the world’s benchmark jumped 10 per cent in just one week, fanning fears that millions across Asia will struggle to afford their staple food.

In a clear sign of the strain on output after major exporters began to curb exports earlier this year, a tender from the Philippines, the world’s top importer, attracted offers to sell only about two-thirds of the half a million tonnes it sought.

In Bangkok, Thai 100 per cent B grade white rice, considered the world’s benchmark, hit $950 (£482) per tonne, three times its price at the start of 2007.

“There’s been a popular misconception that the world can produce as much food as it likes. Well, it obviously can’t. And Asia can’t feed itself at the moment,” Gerry Lawson, the chairman of Sunrice, a major Australian rice producer, said.

Increased food demand from rapidly developing countries, such as China and India, the use of biofuels, high oil prices, global stocks at 25-year lows and market speculation are all blamed for pushing prices of staples such as rice to record highs around the globe.

The unprecedented surge, which some analysts said is going to continue, posed a growing threat to regional governments worried about the prospect of hoarding and social unrest.

Governments in top producer countries, such as Thailand and the No2 exporter, Vietnam, are urging farmers to grow extra crops, although it will be several months before the additional supply hits the market.

Meanwhile, demand from other big importers, such as Iran, which is expected to try to buy up to one million tonnes of Thai rice this year, will keep the upward pressure on prices.

The Philippines is the hardest hit of the Asian nations in the current crisis – although secretive North Korea is likely to be in a worse position.

As a measure of the seriousness of the problem, Manila has temporarily halted conversion of agricultural land for property development, hoping to ring-fence paddy fields to meet the food needs of the country’s 88 million people.

Soldiers guard sales of subsidised rice by the state National Food Authority, and the government has filed charges against 13 people suspected of hoarding.

The global turmoil is such that the US secretary of state, Condoleezza Rice, yesterday said the United States hopes to announce fresh steps to alleviate food shortages around the globe. “The rapid rise in global food prices is an urgent concern,” she said.

Soaring rice prices have come as fears about tight world supplies led governments to hoard and ignited protests in places like Haiti, where five died in food riots last week.

“You’ve been drawing down the world stocks since 2000. You’re down to the bottom of the barrel,” said Ed Taylor, an analyst with Firstgrain.com.