Rice Nourishes Food Fears
19 December 2008 Rice prices have skyrocketed over the last year; according to the Philippines-based International Rice Research Institute (IRRI), export prices have almost tripled between late 2007 and mid-2008. The seemingly out-of-control cost increases caused riots earlier this year in over a dozen countries, mostly across Southeast Asia where rice is a diet staple.
Changing The Business
The current food crisis has caused rice-producing nations to look for alternative solutions. The government of Indonesia, aiming to meet the demand for rice in Muslim nations, is planning for one billion hectares (Ha) of rice estates, once it draws enough investors, said Agriculture Minister Dr. Anton Apriyanto. “We will do feasibility studies of this program and get investors to come to Indonesia,” he told the World Halal Forum 2008.
Thailand — the world’s biggest rice exporter — has suggested the formation of a cartel, tentatively called the Organization of Rice-Exporting Countries, to gain more control over international prices. Thailand spoke with Laos, Burma, Cambodia, and Vietnam, but the Philippines — the world’s biggest importer of rice — argued that with the threefold increase in rice prices, a cartel likened to OPEC — the Organization of Petroleum Exporting Countries, which sets oil prices — could put rice prices beyond the reach of millions of people. However, IRRI head Robert Zeigler gave the proposal some hope, saying: “Rice is grown by millions of farmers in one, two, three hectares of land. Oil is produced by a few multinational companies in a few countries. I think the differences are so large as to make any comparison between the two wild fantasies.” Laos said a cartel would give the countries bargaining power and would consider the idea, as will Burma. Cambodia said the cartel was a necessity, and Vietnamese officials are studying the proposal.
Other countries, such as Sri Lanka, are receiving outside help. The United Nations Food and Agriculture Organization (FAO) plans to boost rice production in Sri Lanka with a US $500,000 project to renovate 6,000 Ha of former rice paddies.
Changing Acreage, Improved Yield
Helping to increase this year’s forecasted production is the addition of a million hectares planted to rice this season, bringing world totals to over 155 million Ha. Countries increasing acreage, such as India, are balancing out countries losing acreage like Vietnam. India expects record rice production for 2007/08 at 96.43 million tons, according to its government; experts predict that the addition of more than half a million hectares will expand 2008/09 production even higher, as long as the weather cooperates.
Meanwhile, Vietnam’s southern localities will plant the winter-spring crop on around 1.63 million Ha in 2008/09, down almost 10,000 Ha from last season. Still, productivity is up, with Vietnam’s total rice production in southern localities up more than 1.5 million tons from 2007. The country’s Ministry of Agriculture and Rural Development has urged farmers to fight and control plant diseases, as well as follow technical instructions to increase yield.
While yield is still improving in crops throughout the world, annual yield growth rate has decrased from 2% to 3% in the 1960s to less than 1% in recent years.
Tight Markets
“The 2008/09 rice market is likely to remain tight,” says IRRI, “even with projected record global production of 432 million tons.” If the world’s rice paddies produce that amount, it’ll be an increase of 1% over last year — still not enough to reduce prices, increase stocks, and feed the estimated 2.5 billion people in Asia who depend on rice, says the institute. Population growth and export restrictions by key producing countries are cited for IRRI’s prediction, which projects global stocks of 82 million tons in 2008/09, up from 78.5 million tons the year before.
Globally, the FAO predicts production growth of 1.8%. Its forecast shows Asian imports likely to decline and imports to Africa, the Middle East, the EU, and the US expected to go up. Next year, it says, the global rice trade is expected to react more to the needs of importing countries than the policies of exporting countries.
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