Asian rice-producing nations curb exports

Straits Times 29 Mar 08;

Vietnam and India join Cambodia in securing domestic supplies as prices hit record highs

BANGKOK - RICE prices soared to all-time highs this week, prompting a scramble among Asia's producing countries to assure their own supplies.

The price of Thai rice, a global benchmark, shot up 30 per cent from US$580 (S$800) to US$760 a tonne on Thursday, according to Reuters data. That was more than double its price of US$360 a tonne less than three months ago.

As a result, Vietnam and India, the world's second- and third-largest exporters, said yesterday they will curb overseas sales. Cambodia earlier announced an export ban on the commodity.

Thailand, the world's largest rice exporter, might lower the hammer on exports in the second half of this year if the price continues to increase, the Bangkok Post reported yesterday.

The skyrocketing prices have encouraged Thai traders to substantially increase their exports, stoking fears about supplies within the country, said Mr Prasert Kosalwit, director-general of the Rice Department.

'A rice shortage in the local market is very likely,' he said.

Indonesia, South-east Asia's biggest economy, was also considering a rice export tax to protect its domestic supplies and discourage exports, senior government officials said on Thursday.

Meanwhile, China announced that it will pay farmers more for rice and wheat, in an attempt to raise output and cool surging inflation.

And South Korea is releasing more rice from state reserves to boost supplies.

The price of rice surged on Thursday after Egypt, a leading exporter, imposed a ban on selling rice abroad to keep local prices down, and the Philippines announced plans for a major purchase of the grain in the international market to boost supplies.

Global rice stocks are at their lowest level since 1976, and foreign sales restrictions have removed about a third of the rice traded in the international market.

Nearly half of the world's 6.6 billion people depend on rice to survive, and it is a staple for more than 2.5 billion people in Asia. With rising populations and economic growth, the world is already eating more of the grain than is harvested.

'I have no idea how importing countries will get rice,' Mr Chookiat Ophaswongse, president of the Thai Rice Exporters Association, told the Financial Times. He predicted that prices would rise further.

Anxiety is running particularly high in the Philippines, the world's largest buyer of the grain. Manila said on Thursday it wanted to buy 500,000 tonnes of rice after failing to buy a similar amount earlier this month.

The Philippines is struggling to import up to 2.2 million tonnes this year, in what could be the biggest overseas purchase in a decade, to cover a production shortfall.

While consumer nations such as the Philippines fret over food security, big producers are aiming to tame inflation by keeping more supplies at home to drive down domestic prices.

In Vietnam, consumer prices rose by nearly 20 per cent this month, the highest in more than 12 years. In a bid to stabilise prices, Vietnam will limit rice shipments to 3.5 million tonnes, down from 4.5 million tonnes last year, a government statement quoted Prime Minister Nguyen Tan Dung as saying.

Hanoi imposed a limit for the first 10-month shipment last week.

'Vietnam will save one million tonnes of rice for northern provinces and will see prices easing after this cut,' said a rice trader at a foreign firm in Ho Chi Minh City, Vietnam's largest grain trading market.

In India, wholesale price inflation is close to a 14-month high, posing a major policy challenge at a time when economic growth is slowing.

New Delhi's response is to raise the minimum sale price for rice exports by more than 50 per cent, effectively ending overseas sales of all but the highest grades.

'The government's move is aimed at a complete halt of non-basmati rice exports,' said Mr Prem Garg, managing director of Lal Mahal Group, a leading rice exporter.

Said All India Rice Exporters' Association president Vijay Sethia: 'There is no shortage of rice in India, but any scarcity in global markets will lead to higher exports.'

World rice inventories now stand at about 72 million tonnes, enough to cover only about 17 per cent of global annual consumption, data from the US Department of Agriculture shows. Just eight years ago, stockpiles were equal to 35 per cent of demand.

ADDITIONAL INFORMATION FROM REUTERS AND ASSOCIATED PRESS

World may be hit as Asia's looming dearth threatens exports
Today Online 29 Mar 08;

WITH the spectre of a rice shortage looming, Thailand — the world's largest rice exporter — may introduce measures to control the amount of grain sold to other countries in the second half of this year.

If this comes to pass — the measures have been floated by Thai Deputy Commerce Minister Wiroon Techapaiboon — the rice crisis, which has affected not only Asia but also the rest of the world, looks set to escalate. Already, India has banned the export of rice while China and Vietnam have reduced export volumes. Thailand, India and Vietnam are the top three rice exporters to Singapore (see box).

On the other hand, in rice-buying Philippines, the government appears to be preparing its people for a possible rice shortage by urging restaurants and eateries to cut the regular serving of rice in their meals to a half-cup .

"Food prices all over the world are going through the roof … It doesn't matter where, everybody has to pay higher prices for food and that's causing a problem," investor Jim Rogers told Bloomberg in Singapore.

In Thailand, the skyrocketing prices of rice have encouraged traders to substantially increase their export volumes. As a result, "a rice shortage in the local market is very likely," Mr Prasert Kosalwit, the director-general of the country's Rice Department, said.

Mr Chookiat Ophaswongse, president of the Rice Exporters Association, said that Thailand could face problems only when it exports more than nine million tonnes a year, he said.

Over the past five months, the country sold more than one million tonnes a month to other countries. If this export volume continues, a shortage is possible, he added.

Mr Chookiat said he supported measures to stamp out excessive exports, such as introducing a minimum export price system. "If the rising rice price continues, the measure may be needed in the second half of this year."

In the Philippines, the government may use taxes collected from rice importers to distribute coupons to poor families to help them buy the grain amid soaring prices, said Finance Secretary Gary Teves.

It is also considering reducing the import tax on rice to between 10 and 40 per cent, from 50 per cent, to encourage traders to make purchases overseas, helping boost domestic supply, Mr Teves said.

Rice, a staple food for the country, is especially important for poor Filipinos, who often eat just rice with some salt to ease their hunger.

While Philippine Agriculture Secretary Arthur Yap insisted that there is no rice shortage, he had triggered the alarm about the country's precarious rice supply when he asked restaurants recently to reduce the amount of rice served.

Peasant leader Jaime Tadeo said that the country's rice problem was just starting. The former government rice technician said that the April and May harvests will only yield supply enough for two months. He blamed the problem on the government's policy.

"Instead of improving local production, the government focused on importation since they found it cheaper to buy outside rather than subsidise our farmers," Mr Tadeo said. "Now, that the price of imported rice has gone up and the supply is scarce, we have nowhere to go to satisfy our needs."

In Vietnam, the world's second-largest rice exporter, the government said it will cut rice exports by one million tonnes this year as part of official efforts to rein in soaring inflation and ensure food security.

"To stabilise food prices, rice exports this year must not exceed 3.5 million tonnes," Prime Minister Nguyen Tan Dung was quoted as telling a government meeting on Thursday. — AGENCIEs