03/06/2008, 00.00
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Prices for rice, Asia’s essential food, skyrocketing

Price rises will continue throughout 2008. Vietnam and other countries are cutting exports. China can no longer meet its domestic demand. UN food aid to region’s poorest countries is at risk.

Bangkok (AsiaNews/Agencies) – Soaring rice prices are creating serious problems for 2.5 billion people, especially in Asia where the cereal grain is an essential food. Experts expect rises throughout 2008, partly as a result of speculation by producing countries.

Thai rice prices, a global benchmark, surged last week above the level of US$ 500 a tonne for the first time since at least 1989, this according to the UN's Food and Agriculture Organisation (FAO), prompting importing countries to seek assurances on supplies.

Rice in the United States, the world's fourth largest exporter of the grain, rose yesterday to a record US$ 400 per metric tonne, up about 75 per cent in the past year.

High prices and extremely tight supplies have led top rice suppliers like India and Vietnam to restrict exports in recent months, ostensibly to keep local markets well supplied and prices under control.

Thailand is expected to cut its exports from 9.5 to 8.7 tonnes per year.

China switched from being a net exporter to being a net importer, partly because rezoning has opened farmland to residential and industrial development.

In spite of a record crop of about 420 metric tonnes in the current season, global rice supplies are lagging behind demand, which is 423 metric tonnes, an increase due to higher demand in the Middle East and Africa, itself caused by higher prices for other food commodities.

The situation is likely to affect the poorer segments of the population for whom rice is an essential and hard-to-replace food item, especially in Asia. In Bangladesh, Cambodia, Indonesia, Laos, Myanmar, Thailand, and Vietnam rice provides 50 to 80 per cent of the total calories consumed.

Robert Zeigler, director at the International Rice Research Institute in Manila, said policymakers should be concerned. “If history is any indicator, we should be worried because rice shortages have in the past led to civil unrest,” he said.

Further increases are expected in 2008. Rising oil prices (making fertiliser production, harvesting and transportation more expensive) and higher prices for other essential food items like cereals, vegetable oils, meat, sugar and bananas are some of the main causes.

Prices are also inching their way up because in Asia, the world’s largest rice-growing region, rice production is increasing very slowly, only 0.5 per cent in 2007-2008.

What is more, governments are not only allowing land to be taken out of production but are also abandoning subsidies without which many farmers are condemned to an existence of poverty and are more exposed to the vagaries of weather-related disasters.

The United Nations is concerned that the situation might affect the aid programme for the poor countries of South-East Asia like East Timor where nearly 40 per cent of the population lives on less than US$ 0.55 a day, and are heavily dependent on food aid. (PB)

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