The rise of rice rustling, along with prices - China Dialogue
Business

The rise of rice rustling, along with prices

Asian countries are curbing exports of a staple crop to avoid shortfalls at home. In a “perfect storm” of factors, global demand is exceeding supply -- and governments are worrying more about food security. Ian MacKinnon reports.

Knee-deep in muddy water, her face smeared with sandalwood paste and a broad-brimmed hat atop her head for protection against the broiling sun, Samniang Ketia grins broadly at her good fortune to be in the rice-growing business as she replants shoots for the next harvest two months off.

The 37-year-old woman, who leases a small plot of land in Samblong, central Thailand, knows the price of rice has rocketed — in some cases nearly doubling in three months — and that she is about to reap the benefit when she sells what her family does not eat.

But the price rises have a downside and have spawned a new phenomenon: rice rustling. One night, a field of one of Samniang’s neighbours was stripped as it was about to be harvested. Local police now have banned harvesting machines from the roads at night, while on the northern plains farmers are camping in their fields, shotguns at the ready against potential rice thieves.

"I’ve never heard of it happening before, that people have stolen rice," said Lung Choop, 68, who grows rice on his smallholding. "But it’s happening now because rice is so expensive. I guess I’ll have to guard my own distant fields when they’re ready."

Across Asia, the suddenly stratospheric rice prices have prompted countries to ban exports amid fears that shortages could provoke food riots. While prices of wheat, corn and other agricultural commodities have surged since the end of 2006, partly because of extra demand for biofuels to offset rising oil prices, rice has held fairly steady.

However, prices for the staple food of about 2.5 billion Asian people rocketed early this year. Thai rice, the global benchmark, which was quoted at just below $400 a tonne in January, rose to $760 in late March.

Aware that shortages of such a vital staple could spell trouble at home, Asian governments have moved to ensure that their people get enough to eat at a price they can afford — an insurance policy which, in turn, has raised prices further.

Near the end of March, Cambodia banned all exports for two months to ensure "food security", following the lead of Egypt, a major exporter. Vietnam, which ships five million tonnes abroad each year, declared a 20% cut in exports.

India started the ball rolling in late 2007. With dwindling stocks, the large exporter introduced curbs that effectively banned exports, around four million tonnes. Pakistan and China also introduced curbs.

Hopes that India would re-enter the rice market within the next few months were dashed on March 27, 2008, when the country raised the minimum price for exports from $650 a tonne to $1,000, effectively maintaining the ban, which was escaped only by the foreign currency-earning premium basmati variety.

The Philippines is potentially among the biggest losers; with 91 million people, the country cannot feed itself. After its farmers warned of a looming shortfall, Manila’s fast-food outlets offered to serve "half portions" of rice to conserve stocks. The Philippine president, Gloria Macapagal Arroyo, also has pleaded with Vietnam to guarantee 1.5 million tonnes of rice this year.

In Indonesia, people took to the streets of the capital, Jakarta, in protest at rising rice prices — and now even Thailand, the world’s largest exporter, is bracing itself. The country produces 30 million tonnes of rice a year, and aims to export 8.5 million tonnes. Last year 9.5 million tonnes was sold abroad and more may be exported this year, prompting government ministers to consider curbs. "A rice shortage in the local market is very likely," said Prasert Kosalwit, director general of the Thai government’s rice department.

Rice shortfalls were reported in southern Thailand as traders from the northern rice belt bought up stocks at inflated prices. With global rice stocks at their lowest level since 1976, analysts expect price rises to continue until the end of next year. Some analysts predict it could hit $1,000 a tonne before farmers, spurred by the high prices, plant more crops and increase supplies.

Demand outstripped supply by nearly two million tonnes last year. The predicted shortfall this year is more than three million tonnes on the 424 million tonnes required. Across Asia, with its vast and growing population, there is little if any extra land to bring into production, and it may take several years for any "supply response" to materialise.

Growing urbanisation over the longer term in countries such as China and India is cited as a key factor in the rice shortfall, where the increasingly affluent middle classes demand more meat and dairy products, with land turned over to growing feed for livestock.

Rising wealth in Africa has also become a factor. Oil-rich Nigeria is now the largest importer in Africa, a continent which takes the largest share of Thai exports, about 40%. Asia soaks up 35%.

Severe weather across Asia also has damaged production. Record icy temperatures occurred in China and Vietnam, the latter of which also suffered a pest outbreak. Bangladesh endured a devastating cyclone, while Australia suffered a prolonged drought.

"It’s been described as a ‘perfect storm‘ of factors that have pushed prices to their highest levels since the 1970s," said Adam Barclay, of the Philippines-based International Rice Research Institute (IRRI).

The World Food Programme (WFP) also is alarmed. The extra cost of feeding the 28 million "poorest of the poor" spread across 14 Asian countries will cost $160 million a year and the United Nations agency has asked three dozen donor governments for the cash, part of a $500 million global appeal to offset rising food prices.

"The real danger with rising rice prices,” said Paul Risley, spokesman for WFP Asia, “is that the ‘working poor’ will simply be pushed into the category of ‘poor’, who will look to us to feed them. There are hundreds of millions living at, or just below, the poverty line of $1-a-day, spending 70% of their day-labour wages on food.”

"If food costs double,” he added, “they’ve no opportunity to increase their earnings and no alternative but to reduce what they and their families eat."

Copyright Guardian News & Media Ltd 2008

Homepage photo by my visita lglesia