Rice prices on the rise in Asia

Friday, 29 October 2010 14:51 -     - {{hitsCtrl.values.hits}}

Dhaka (AsiaNews/Agencies): Rice prices are up following drought and floods in many rice-producing countries. A food crisis is in the making, like the one of 2008, but governments appear to have learnt the lesson and are poised to cope with the challenge.

Floods killed at least 162 people this month in Southeast Asia, damaging crops in Thailand and Vietnam, the world’s biggest rice producers. This summer, floods also devastated wheat production in Pakistan, whilst typhoon Megi lashed the Philippines.  In Russia and parts of eastern Europe, wheat production suffered from the worst drought in 50 years.

The US Department of Agriculture lowered its estimate for global milled rice output to 452.5 million tonnes on 8 October, 171,000 tonnes short of forecast demand. The global production deficit, the first in four years, may be even wider because typhoons and flooding hit Southeast Asia days after the USDA released its estimate.

Rough-rice production from the main crop in Thailand, the world’s biggest exporter, will “definitely” decline by an estimated to 1.5 million tonnes after the worst floods in five decades inundated key growing areas, this according to Prasert Gosalvitra, head of the state-run Rice Department. That would be a 6.5 per cent decline from last year’s main crop of 23 million tonnes. Actual losses will not be known until floodwaters recede, he said.

Floods spread across 36 provinces in central, north and northeastern Thailand, affecting at least 3.2 million people and damaging about 3.5 million rai (1.4 million acres) of agricultural area, the Department of Disaster Prevention and Mitigation said in a statement today.

Official figures indicate that in Pakistan, floods damaged cultivation for 286.1 billion rupees (about US$ 2.36 billion), wiping out 2.39 million tonnes of rice.

Typhoon Megi, the strongest storm to hit the Philippines this year, affected 22 per cent of the 1.86 million hectares planted with rice, the Department of Agriculture (DA) reported.

Losses reported from the DA’s local units have so far reached 468,546 tonnes, about 6 per cent of the forecast fourth-quarter harvest, the Department said.

Rice prices are rising everywhere. In many countries, the authorities can resort to reserves, but this means that next year prices will continue to rise because the latter will have to be restocked.

In Bangladesh, rice prices are soaring as well, with the national staple food now selling for 33 taka (US$ 0.47) a kilogramme, almost double the price this time last year.

When global food prices shot up in 2008, Bangladesh’s capital of Dhaka was rocked by street protests as people queued for hours to buy cheap, low quality, state-subsidised grain. When authorities sent trucks to sell rice at just 25 taka per kg during the recent Muslim holy month of Ramadan, they found few takers for the poor-quality grain generally eaten only as a last resort.

According to experts, higher workers’ wages and foreign remittances allow people to absorb price increases and turn down low quality government supplied rice.

Bangladesh, the world’s fourth-biggest rice producer, normally imports about 10 per cent of the grain it needs to feed its 150 million people.

However, in 2007, its monsoon paddy crop was devastated first by repeated flooding, then by deadly Cyclone Sidr, which killed 3,500 people, displaced more than 2 million and ruined 800.000 hectares of cropland.

During the food crisis of 2007-08, when rice prices doubled to US$ 500 a tonne, big producers such as Vietnam and India imposed export bans to keep their markets well supplied and domestic prices low. This triggered a shortage in the overseas market where consumers hoarded and prices soared to a record high of US$ 1,000 a tonne.

Since then, Bangladesh has learnt its lesson and has made self-sufficiency in rice production a priority, with emphasis on the dry season crop, expanded irrigation, improved distribution of high-yield seed, and subsidised fertiliser for farmers. The results have been promising, with the dry season harvest rose to 18 million tonnes from 14 million just a couple of years ago.

Vietnam records highest rice yields in Southeast Asia

With a yield of 5.3 tonnes per ha per harvest, Vietnam now ranks top in rice productivity in Southeast Asia, confirmed Deputy Minister of Agriculture and Rural Development Bui Ba Bong.

Some major rice producing areas such as the Mekong Delta provinces of An Giang, Can Tho and Dong Thap reaped up to 7.3 tonnes per ha in the freshly-harvested winter-spring crop, equivalent to world leading producers like Japan and the Republic of Korea.

The nation’s rice production output is estimated at 39.9 million tonnes in 2010, with southern provinces producing over 23.5 million tonnes, reported the Cultivation Department.

The Mekong Delta alone makes up almost 91.5 percent of the southern production output, gathering 21.5 million tonnes with an average per-ha yield of 5.47 tonnes.

The figures show Vietnam’s improved rice farming, explaining why Vietnam has entered into the list of world giants in rice exports.

In the past 10 months, the country has already exported 5.66 million tonnes of rice, earning US$2.63 billion. The yearly rice export volume is expected to reach 6.5 million tonnes due to the supply of wheat falling short.

The Ministry of Agriculture and Rural Development (MARD) forecast a “possible skyrocketing” in world rice demand with Indonesia, which failed to reach a deal with Thailand, likely to import an additional 200,000 tonnes of rice from Vietnam. Typhoon Megi wreaked havoc in the northern Philippines and is expected to push the country to import between 500,000 and 600,000 tonnes of rice.

“The situation may drive the world rice market into a chaos,” said economists, adding that a surge in demand would make prices escalate.

In October, major rice exporters, including Vietnam, Thailand, Pakistan and India, increased their export prices by at least 30 percent over the previous month.

Despite increased prices, Vietnam does not have much rice in storage for export, said MARD.

The world’s second largest rice exporter has expanded its line-up to parboiled rice, which is expected to increase by 300,000-400,000 tonnes in 2011 to meet rising demand, said the President of the Vietnam Food Association, Truong Thanh Phong.

Parboiled rice preferred by Muslims as it is dry when fully cooked, making it easy to eat by hand. The world demand for the product is estimated at between 3.5 and 4 million tonnes a year. Its price per tonne is often US$70-80 higher than five percent broken rice product, which now plays a key role in Vietnam’s rice exportation.

Vietnam’s parboiled rice quality is higher than that from Pakistan and India, the two biggest parboiled rice exporters of the world, sparking confidence on the “high competitive edge” among domestic rice exporters, Phong said.

VFA members are building three parboiled rice factories in the Mekong Delta, one of which - with a daily capacity of 500 tonnes - is scheduled to start operation later this year, bringing the total number to five.

The VFA has a plan to join hands with the Cultivation Department in marking off a special zone to provide raw material for these factories.