Rice shortages are appearing across Asia. In Egypt, the Army is now
baking bread to curb food riots.
By Daniel Ten Kate | Correspondent of The Christian Science Monitor
from the March 27, 2008 edition
Bangkok, Thailand - - Rice farmers here are staying awake in ****fts at
night to guard their fields from thieves. In Peru, shortages of wheat
flour are prompting the military to make bread with potato flour, a
native crop. In Egypt, Cameroon, and Burkina Faso food riots have
broken out in the past week.
Around the world, governments and aid groups are grappling with the
escalating cost of basic grains. In December, 37 countries faced a
food crisis, re****ts the UN Food and Agricultural Organization (FAO),
and 20 nations had imposed some form of food-price controls.
In Asia, where rice is on every plate, prices are shooting up almost
daily. Premium Thai fragrant rice now costs $900 per ton, a nearly 30
percent rise from a month ago.
Ex****ters say the price could eclipse $1,000 per ton by June.
Similarly, prices of white rice have climbed about 50 percent since
January to $600 per ton and are projected to jump another 40 percent
to $800 per ton in April.
The skyrocketing prices have prompted millers to default on rice
supply contracts and bandits to steal rice as they aim to hoard the
crop, and sell it later, as prices continue to rise.
"The farmers are afraid as their fields have been robbed in the
nighttime," says Sarayouth Phumithon, an official at the Thai
government's Bureau of Rice Strategy and Supply. "This is just the
beginning. The problem will get worse if the price keeps increasing."
The re****ted thefts in five rice-growing provinces in central Thailand
are the first signs of criminal activity in this region stemming from
the sharpest global spike in commodity prices since the oil crisis in
the mid-1970s. Across the world, higher food prices are triggering
thefts and violence - both by people who can't afford to eat and those
who want to make an easy buck.
Three men delivering food for the World Food Programme (WFP) in Sudan
were re****ted killed Tuesday, the latest in a surge of attacks that
have delayed the arrival of vital supplies to some 2 million people in
the region.
So far this year, the UN agency says 56 trucks have been hijacked in
Sudan; 36 trucks remain missing, and 24 drivers are unaccounted for.
The WFP says that banditry has reduced by half the amount of food
normally trans****ted to the western region of Darfur at this time of
year.
"All parties must recognize that the drivers of humanitarian vehicles
and their cargo are serving a neutral purpose," WFP Sudan
representative Kenro O****dari said in a statement.
Last year, the Food and Agriculture Organization's food price index
increased an unprecedented 40 percent from 2006, and this year it is
projected to continue rising. Surging oil prices (in turn, boosting
fertilizer and trans****t costs) combined with a drop in production due
to droughts in Australia and the Ukraine have helped to drain global
food stocks.
While rice production is rising, consumption is growing faster. The US
Department of Agriculture forecast rice stocks to fall to their lowest
level since the mid-1970s, and wheat stocks are projected to hit their
lowest point since 1946, the year after World War II ended.
These factors, combined with a falling US dollar, steadily rising
demand from developing countries, and biofuel policies that mop up
excess cereal production, have all helped boost world prices.
The FAO expects food prices to stay high for the next three to five
years, presenting a challenge for governments trying to keep domestic
food prices low in order to keep poor citizens properly fed and avoid
mass protests and social unrest.
Some countries like Vietnam, India, and Pakistan have banned grain
ex****ts. On Wednesday, Cambodia's prime minister ordered a two-month
ban on rice ex****ts to neighboring Thailand and Vietnam "to guarantee
food security."
Meanwhile food im****ters Indonesia, Korea, and Mongolia have cut or
reduced im****t tariffs. As Philippine farmers warned that the country
was facing a serious rice shortage, the government signed a deal
Wednesday to im****t 1.5 million metric tons (1.65 million US tons) of
rice from Vietnam.
Analysts note that the current shortage isn't hitting as many people
as hard as past shortages. As incomes rise worldwide, food is a
smaller ****tion of the family budget. "Governments have tried to
protect domestic prices from fluctuations in international prices, and
they have succeeded in the past," says Sumiter Broca, a policy analyst
at the FAO. "The key point is that the pro****tion of income spent on
food is much lower than it used to be, so that provides a cu****on. The
situation is not as serious as it was in 1974."
Citizens of Nepal and India now spend about 35 to 40 percent of income
on food, down from about 70 to 80 percent in the early 1970s, Mr.
Broca says. In developing countries, food costs eat up only about 7
percent of household incomes.
The FAO expects food prices to stabilize and eventually drop as
farmers plant more grains. That's already starting to happen with
wheat and corn. But the next few years could be difficult.
On Monday, the WFP, a UN agency that distributes food aid to some 70
million poor people, made an "extraordinary emergency appeal" to donor
countries for $500 million to prevent cutbacks in its global
operations.
In the past two weeks, two rice suppliers in Cambodia defaulted on
contracts with the WFP, claiming the new higher prices would offset
any penalty for reneging on the contract.
"That's extremely worrying, as it indicates the price of rice, just
like the price of wheat, is now continuing to increase," says Paul
Risley, a WFP spokesman. "That makes it very difficult for us to find
rice at an affordable price. The ability to end malnutrition is
limited when food prices are so high."
Countries with higher foreign exchange reserves and food stocks,
including China, Japan, and India, can still afford the high food
prices if necessary. But nations with low currency reserves like the
Philippines, Pakistan, Bangladesh, and Nepal may need assistance from
international financial institutions to afford food if prices continue
to spike.
Although higher food prices mean trouble for consumers and
governments, they do increase incomes for farmers - assuming their
crops aren't stolen. Still, farmers aren't making as much money as a
middleman with a good-sized warehouse.
Rice millers in Thailand are defaulting on contracts with ex****ters to
capitalize on higher prices, and speculators are renting warehouses to
store paddy. Rice in paddy form (in the husk) can be stored for about
a year and a half before quality starts to deteriorate, and milled
rice can be held for another six months.
"Nobody dares to sell now as we don't know where the price is going,"
says Chookiat Ophaswongse, president of Thailand's Rice Ex****ters
Association. Although Thailand, the world's largest rice ex****ter, has
****pped record amounts in January and February, traders have lost
money on futures contracts as prices have jumped more quickly than
anyone expected, he says.
In the Philippines, President Gloria Macapagal Arroyo has vowed to
crack down on rice hoarders. The government has ordered police to
stake out warehouses and follow trucks to see where the rice was
going, she said.
Thailand may try to sell off 2.1 million tons of rice stocks to keep
domestic prices low. But as long as prices stay high, Thai farmers
will need to burn the midnight oil keeping watch over their fields.
"Most farmers must sell crops immediately as they don't have a good
warehouse that can withstand attacks from rats, birds, chickens - or
human thieves," says Mr. Sarayouth.
Associated Press re****ts were used in this story.
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