Rice Rises on Shortage Fears

BANGKOK - Apr 10/08 - IRIN -- As food prices continue to skyrocket throughout Asia, many governments are intervening to try to stabilize their domestic rice prices for fear of acute shortages and possible food riots. World stocks of rice have fallen to their lowest since the early 1970s, and many agencies, including the UN World Food Programme (WFP), are increasingly worried that food shortages and price rises will mean cutting back on food assistance.

The top quality Thai hom mali rice now costs US$1,000 per metric ton (MT) - up more than three-fold from the start of the year. A more inferior quality of 25 percent cracked rice, which the WFP buys for its program, is now just less than US$800 - nearly three times more than four months ago. Many traditional exporting nations, including Cambodia, Egypt, India and Pakistan, have banned exports of rice, while China and Vietnam have cut back dramatically.

"Malnutrition is almost certainly going to rise significantly in many of the poorest parts of Asia," Action Aid's international director, John Samuel, told IRIN.

The poorest Asian families will suffer most as they spend more than 70 percent of their income on food, according to WFP. Unable to afford high-priced rice, they must rely on government-subsidized rice or international food aid. But these sources are increasingly in jeopardy because of price rises and shortages.

"In Nepal alone, the number of vulnerable people has jumped from four to eight million in the last six months as a result of the market price increases and related factors," said Tony Banbury, the regional head of WFP. "That's 30 percent of the population in acute need of assistance."

"Our school-feeding programs in Cambodia have been effectively suspended," Thomas Keusters, the head of WFP operations in Cambodia, told IRIN. "Effectively there will be no school-feeding program for the rest of the academic year, affecting 450,000 children in grades one to six."

Some supplies of rice bought by WFP in the local market have not been delivered. Five suppliers have defaulted and WFP is short of 13,000 metric MT needed over the next six months.

In Bangladesh and Pakistan, people wait for hours to buy subsidized rice in 5kg packs. In Thailand, the major supermarkets ration sales to three 5kg bags per person to prevent panic buying.

Thailand's Commerce Minister, Mingkuan Sangsuwan, has announced a government-sponsored cut of about 10 percent in all retail rice prices from 14 April. The discount will end in two months when the new rice crop, which is expected to be good, is harvested. Sufficient rice stocks should then be available to meet Thai market needs, according to the Thai Rice Millers' Association.

But elsewhere in Asia, governments are less sanguine. For example, the Philippines secured only half its bid of 500,000 MT from Vietnam two months ago and is expected to tender Hanoi for another 1 million MT, Vichai Sriprasert, one of Thailand's leading rice exporters, told IRIN. But they are unlikely to get more than half of that, he added.

Bangladesh has managed to secure 400,000 MT of rice from India - which has allowed limited exports on humanitarian grounds. Bangladesh also has a pledge from Burma to supply up to 500,000 MT.

Burma has also agreed to supply Sri Lanka with 50,000 MT of rice at $400 a MT according to Anusa Palipta of the Sri Lankan government. Sri Lanka is also getting 32,000 MT of rice from India and Pakistan.

"The massive food riots in the Haitian capital this week are a wake-up call for all Asian governments," said Action Aid's John Samuel. "If immediate measures are not taken, like protective price and effective distribution mechanisms, there will be food protests here too. There is an agrarian crisis looming, which will become a major political problem, especially for Asia's democracies."

Already in Bangladesh, Indonesia and the Philippines, each of which has elections in the coming year, anger is growing. "Soaring food prices have become a serious threat to the survival of the present [caretaker] government," said Bangladeshi economist and political scientist, Atiur Rahman. "Food price hikes are likely to cause hortals [strikes], food riots and violence on the streets."

"This is a crisis that has been brewing for years," said Samuel. "Although there has been substantial economic growth right across the region, this has been in the industrial and service sectors; investment in agriculture has stagnated or even declined in real terms. Unless there is concerted investment in agriculture in Asian countries, food price hikes will become a perennial problem."

Copyright (c) UN Office for the Coordination of Humanitarian Affairs 2008

Integrated Regional Information Network (IRIN)

Copyright (c) 2008 UN Office for the Coordination of Humanitarian Affairs