HONG KONG: President Gloria Arroyo convened a food summit with top officials and farm experts on Friday, looking for ways to prevent the emerging rice crisis from severely affecting the world’s biggest importer of rice.
This came as the latest effort by the Philippine government to ensure food supplies and control soaring rice prices, which is also seen as a major task in other Asian countries, where rice is consumed daily by every household.
Crisis beyond the Philippines
Part of a surge in global food price, international rice prices have increased by about 20 percent in the past three months and at least doubled since 2004, said a recent statement by the UN Food and Agriculture Organization. There are concerns prices could rise further in coming months.
Experts blame rising fuel and fertilizer expenses, a shift of investment money into commodities as well as crops curtailed by disaster, pests and climate change.
Some countries like the United States were also blamed for diverting farm produce to make biofuels, which had led to soaring global food prices.
About 20 percent of last year’s 13-billion bushel corn crop was consumed by ethanol production. That percentage is expected to increase to 30 percent for the next crop year ending August 31, 2009, Terry Francl, a senior economist for the American Farm Bureau Federation, was quoted by the Associated Press on Thursday.
The sharp rise of food prices is hitting consumer pocketbooks and raising fears of a rice supply shortage around Asia, spurring the governments to dig deeper to stabilize domestic markets.
Things are so tight in the Philippines that Agriculture Secretary Arthur Yap has asked people not to throw away leftover rice and urged fast-food restaurants, which normally give customers a cup of rice with meals, to offer a half-cup option to cut waste.
Last week, President Arroyo arranged the purchase of up to 1.5 million tons from Vietnam, at an average price of $708.04 per ton, 49 percent above the price it had paid in January.
She also has ordered a crackdown on price manipulation, hoarding and profiteering on subsidized rice.
The Philippines is the most pertinent example of the rice effect, but the risk could be repeated in other parts of Asia.
Experts have warned that the mounting food prices are hurting the region’s many poor, leading to rising inflation and significant decline in the real incomes of the poor.
Price hike continues
Rice prices have almost doubled in just a year in Bangladesh, which suffered an annual food inflation of 16 percent after massive floods in July and August, and Cyclone Sidr in November, which devastated rice and other crops.
The Bangladeshi government announced Monday it will import 400,000 tons of rice from India by the end of May to sell below cost on the open market in a bid to ease the rocketing price.
This purchase will boost the total amount of subsidized rice available at government-run shops to 120,000 tons in April—nearly triple what had been on offer before, Food Secretary Molla Wahiduzzaman said.
Government outlets sell rice at 25 taka (the currency in Bangladesh) a kilogram, around 40 percent less than the market rate.
Rice price in the world’s two leading rice producers, Thailand and Vietnam, are expected to surge after India’s ban on exports of non-basmati rice.
Recently, India, which normally exports 4 million tons annually, imposed a ban on non-basmati rice exports to ensure the country has enough rice to feed its more than 1 billion people and to ease pressure on domestic prices, which have pushed wholesale inflation to a 14-month high.
Traders said the ban might trigger a scramble among rice importers struggling to secure supplies and control prices.
Thailand’s Deputy Prime Minister and Commerce Minister Mingkwan Saengsuwan has projected the export prices of the Thai jasmine rice will double, reaching $968 per ton in the next quarter from the $484 per ton at the moment.
Some Thai officials and experts have warned that the biggest rice exporter could face a domestic rice shortage itself after skyrocketing prices on overseas markets have encouraged traders to increase export volume.
However, the Thai government has floated the suggestions to control rice export, saying the official stockpile of 2.1 million tons is sufficient for domestic consumption. “It is simply a matter of demand and supply that has caused some shortage and rising prices during this period,” Thai Prime Minister Samak Sundaravej said Friday.
Export restriction
Thailand seems to be the only one talking about selling as a number of countries have imposed restrictions to limit rice exports and keep more of their food at home.
Vietnam, the world’s second-biggest rice exporter, has halted new export deals for March and April shipment. Last week, Prime Minister Nguyen Tan Dung said Vietnam would cut rice exports by 22 percent this year as it fought to rein in soaring inflation at home and secure food supplies.
Cambodia, which is experiencing a rice surplus, also announced this week to ban rice exports for two months.
The rice prices in the country have risen sharply from about $0.40 a kilogram to highs of nearly $1, sparking demands that the government put a cap on costs.
Cambodian Prime Minister Hun Sen said the ban was a temporary measure to ensure food security, blaming the price hike on “economic sabotage.”
Indonesia, which is another major rice producer but needs to feed a large population, is cooking up a regulation on banning rice export. According to the leading economic daily Bisnis Indonesia, the government has been worried that expanding price gap between domestic and global markets could encourage local rice producers to heavily sell to export markets.
The Indonesian government recently approved state-run logistic agency Bilog to import up to 1.5 million tons of rice to secure domestic supplies, even when the agriculture officials reported a likely surplus of 2.3 million tons this year in rice production.
The surplus was too small to turn Indonesia to a major rice exporter, the officials argued.
Production seen to rise
One of the few good news was Wednesday’s statement by the Rome-based Food and Agriculture Organization, which said the world rice production was expected to rise this year in all the major producing countries in Asia, including China, India, Indonesia and Thailand.
Rice production will increase by 1.8 percent, or 12 million tons, assuming normal weather conditions, easing a tight supply situation in key producing countries, the agency said.
It also said the rocketing international rice price may ease in the next few months, with new rice harvests in Latin America and Asia.
Meanwhile, experts are calling for reconsideration of biofuel from crops like corn.
“We should be very, very careful about coming up with biofuel solutions that have major impact on production of food grains and may have an implication for overall food security,” Nobel Peace Prize winner and climate change scientist Rajendra Pachauri told a news conference in Brussels on March 26.
“As citizens of the world, we ought to be concerned about the foolishness of growing food and diverting it into fuel,” said Indian Finance Minister Chidambaram on the same day in Singapore.
