Market panic pushes rice prices sky high
Apocalyptic visions of a world fast running out of food have moved uncomfortably up the news agenda to present-day reality. The Financial Times reports that rice prices have hit the US$1,000-a-tonne level for the first time as panicking importers scrambled at auctions (April 17th 2008) to secure supplies. Their actions thereby further exacerbating the tradable shortfalls already provoked by export restrictions in Vietnam, India, Egypt, China and Cambodia.
The jump to US$1000 a tonne came as the Philippines, the world’s largest rice importer, failed for the fourth time to secure as much rice as it wanted. The unsuccessful tender followed Bangladesh’s inability to buy any rice at all this week. Trade analysts have warned for some that rice demand was escalating in spite of prices rising to three times the level of a year ago as countries desperately try to build up stocks.
For many governments across Asia the growing rice shortage is proving an even greater problem than the global credit crunch. A leading rice exporter in Bangkok, Riceland, said several of its customers, including governments, were buying far more than they usually did amid fears about scarcity.
Michael Whitehead, a rice specialist for the Rabobank in New York, says -: “The potentially destabilising social effect of rice shortages in most high consumption countries has strengthened the resolve of governments to build supply.”
Already we have seen that rising rice prices have triggered riots in the past few month in countries such as Haiti, Bangladesh and Ivory Coast. Rice is considered the most political agricultural commodity as it is a staple for about 3bn people in some of the poorest countries across Asia and Africa