Hong Kong: The soaring price of rice has triggered a supply and demand crunch that is hurting some of Asia’s neediest countries, forcing them to spend more on imports, industry experts and officials say.
For Thailand and Vietnam, the world’s two biggest exporters, the rising demand is a money-spinner, with rice now selling at more than $500 (Rs20,250) a tonne in Bangkok and nearly as much in Hanoi.
But from Bangladesh to the Philippines, from India to Indonesia, the squeeze is bad news as authorities seek to balance cost with the imperatives of feeding hungry populations and averting social chaos.
“Every Asian government is well aware of the close relationship between political stability and the stability of the rice price,” Jonathan Pincus, NDP’s chief economist in Vietnam, said.
At the end of February, Thailand’s benchmark rice was trading above $500 a tonne, a rise of more than $100 from a month earlier. Exporters in Vietnam, meanwhile, were setting prices at $460 a tonne last month, the state news agency VNA said—up more than 50% from a year ago.
“It’s a global issue. All cereal prices are going up,” said Andrew Speedy, the UN Food and Agriculture Organization’s Vietnam representative. “This is quite serious. It’s hurting everybody, especially the poor.”
In the first two months of 2008, Vietnam’s rice exports brought in $150 million, an increase of 78% from a year ago.
Much of the output is destined for the Philippines. Unable to meet its own needs, the Philippines will import up to 2 million tonnes (mt) of rice this year, according to the government.
Indonesia’s rice production has been outpaced by its population growth for more than a decade, said Mangara Tambunan from the country’s Centre for Economics and Social Studies. “The government has to open the door to more imports. It should not be so reticent,” he said.
In Bangladesh, which has a population of 144 million, the price of rice has doubled in a year, vastly outpacing income levels, said Ruhul Amin, deputy head of the government’s food planning unit. “People are cutting all their other spending to focus only on food,” he added. This year Bangladesh will need to import some 3mt. Some of that is coming from India, but otherwise New Delhi has halted exports of non-basmati rice to keep its own prices in check.
India allowed the export of 3.2mt of non-basmati rice in the first half of the current financial year, but since October no new contracts have been signed. The move has upset the All India Rice Exporters’ Association.
“Farmers react to high prices by producing more,” said its president, Vijay Sethia. “Restricting trade just distorts the price signal.”