Rice Shortage Scares: Would The Real Culprits Please Step Forward?

BANGKOK — Alarms about a possible new Asian rice crisis on the back of last year’s “shortages” may be nothing more than scaremongering to keep prices up while a much more serious problem is developing almost unnoticed.

New shortage fears surfaced around the sidelines of an international rice conference in the Philippines last month and have been repeated since.

A laborer takes a nap on sacks filled with rice at an agriculture product marketing committee yard at Jetalpur on the outskirts of the western Indian city of Ahmedabad. (Photo: Reuters)

They have been based on reports of bad weather slashing crop volumes in India, the Philippines and Vietnam.

But the fact is that record quantities of rice are being hoarded by key producers Thailand, India and China.

Figures just published by the International Rice Research Institute (IRRI) show that India is sitting on up to 25 million tonnes and Thailand as much as 8 million tonnes, while China probably holds about 50 percent of the world’s rice stocks at any one time.

Even poor Burma claimed earlier this month to have 1 million tonnes surplus available for export.

These figures belie predictions that bad weather this year in India, the Philippines and Vietnam will cause a rice shortage that could spark regional shortages and rocketing prices.

The USA Rice federation says India could distort the market by buying between 1 million and 3.5 million tonnes next year, and storm damage in the Philippines will force that country to sharply increase its imports.

But the Philippines’ National Food Authority says for the moment the country has sufficient stock to avoid unplanned buying which could push up market prices.

Unfounded shortage scares in late 2007 and early 2008 caused panic buying and overreaction by governments and the market which sent prices climbing, triggering export curbs.

And contrary to claims that prices have never come back down since then, the IRRI says average rice prices in Asia are 60 percent lower today than their May 2008 panic rates.

However, last year’s major intervention in the market by several governments has led to state hoarding, says the IRRI.

“One of the undesirable outcomes of raising the [state] support level has been the diversion of rice away from the market to government warehouses,” says the Philippines-based IRRI in a new report.

A much bigger problem for future rice supply is declining crop yield. Although the amount of land being planted with rice is expanding, the production level per hectare is declining, says the IRRI.

“Irrespective of what happens to the market in the next few months, the fundamental problem for achieving global rice security, sagging yield growth, has yet to be addressed,” reports the IRRI in its latest issue of Rice Today.

“Over the past eight years, nearly half of the production increase has been attributed to area expansion rather than productivity growth,” it said.

These figures indicate that land under rice cultivation globally is at an all-time high, yet yield growth per hectare is declining while consumption rises 1.5 percent a year.

“With further area expansion less likely in the future, productivity growth must be ramped up if we want to feed the hundreds of millions of poor people,” said the IRRI.

Attempts to establish a form of rice cartel in Southeast Asia with the aim of managing the market and prices have so far failed, mainly because of the huge disparity in standards of production and costs between the countries that have expressed an interesting in joining—Thailand, Vietnam, Cambodia, Laos and Burma.

A rice industry official in Thailand, who did not wanted to be named because of the sensitive nature of the subject, said Cambodia, Laos and Burma have little or no verifiable production information.

“They produce poor quality rice which sells at the bottom end of the market compared to Thailand’s quality crops,” he said.