Monday March 10, 2008

Soaring rice prices hurting Asia's neediest nations

channelnewsasia.com :

The soaring price of rice has triggered a supply and demand crunch that is hurting some of Asia's neediest nations, forcing them to spend more on imports, industry experts and officials say. For the likes of Thailand and Vietnam, the world's two biggest exporters of the grain, the rising demand is a money-spinner with rice now selling at more than US$500 a tonne in Bangkok and nearly as much in Hanoi. At the end of February, Thailand's benchmark rice was trading at more than US$500 a tonne, a rise of more than US$100 from a month earlier and up from just US$325 a year ago. But from Bangladesh to the Philippines, from India to Indonesia, the squeeze is bad news as they seek to balance cost with the imperatives of feeding hungry populations and averting social chaos.

Exporters in Vietnam meanwhile were setting prices at US$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 Organisation'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 US$150 million, an increase of 78% from a year ago.

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. Last year, Indonesia imported 1.5 million tonnes. Heavily subsidised rice is also sold to millions of the poorest families, yet even those prices are rising.

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," Amin said, but with 40% of the population relying on a dollar a day or less, the poorest are struggling to survive.

- Like I wrote earlier in my inflation-fighting guide, for the poor, the fight against inflation can be a fight for survival. As a food group, you cannot really get more basic than rice, and you cannot substitute it easily, since it is a staple food for the billions of people in the Asian countries. I was talking about what happens if the cost of food doubles for the poor, and apparently, as you can see, it has already been happening in Bangladesh. This is bad. If inflation continues to take off, which is what I see happening, things will be getting very bad, very quickly.

See also :

1. Rice prices are steaming, with many implications

(2008-03-10 13:32:00 SGT) [Biz] Permalink Comments [1]

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