Cost of rice has reached dizzy heights and is not showing any signs of retreating. The 20 year high price of rice is causing insurmountable misery to the Asian policy makers and 2.5 billion people of those nations whose staple food is rice. The danger lies in the fact that the rice farmers have not been able to translate the price hike into profits owing to rising production cost and decreasing income. Rice shortages have in the past led to civil unrest, as pointed out by Robert Zeigler, director at the International Rice Research Institute in Manila, and cannot be overlooked by the policy makers.
The current season was able to produce a record crop of 420m tones which is still short of the actual global demand of 423m tones. The rice inventory has reduced to 70m tones as compared to 150m in 2000, is one of the lowest in past 25 years. First time since 1989, the Thai rice prices, a global benchmark have seen bids above $500 per ton of rice. Already the traders are disgruntled with Thai exporters who have defaulted on rice supplies due to higher profits in their domestic markets. Philippines being the world’s largest rice importer, their president have made moves for the first time to secure guaranteed amount of rice for 2008 – 09 season from neighboring Vietnam.
Analysts have attributed the surge in rice prices to various factors including climate change, pressure put on food crops due to their usage in bio-fuels and soaring fuel prices. Urbanization that has cut the acreage given over to cultivating the grain and strong demand on the back of rapid income growth in China, India and other Asian countries have also triggered price rise.
Experts further add that higher prices of rice as well as other food crops could spark off famines which are hitherto unknown to Asian countries since 1970. As most of the Asians earn less than 1 dollar a day, buying rice for more than 50% of their earnings would have a debilitating effect on the dependent economies on a whole.