Subject: IPS: Rice now too costly to give away

Mar 6, 2008

Inter Press Service

Rice now too costly to give away

By Marwaan Macan-Markar

BANGKOK - Soaring global rice prices are hitting the stomachs of Asia's poorest citizens. The people of East Timor, where nearly 40% live on less than 0.55 US cents a day, have just been told they may not receive their annual quota of food aid.

"We have been forced to provide less food to East Timor; provide less rice than we intended to," Paul Risely, Asia spokesperson for the United Nations food agency, told Inter Press Service (IPS). "We have requested the people of East Timor to look for local substitutes."

Part of the problem stems from poor planning with the Dili government urging the World Food Program (WFP) to step in only after finding that it could not afford to purchase sufficient quantities of the grain from Vietnam, due to high prices.

"Any chance to reduce high malnutrition rate is severely curtailed," added Risley of a country that suffers from chronic malnutrition, where some 46% of the children are stunted and 42% of children below five years are underweight. Currently, the WFP has pledged to feed one in five people in East Timor which has a population of 1.1 million people.

Vietnam, the world's second largest exporter of rice, shipping out nearly 4.5 million tons of the grain annually, has been a major supplier of rice for the WFP's global program. Neighboring Thailand is the largest rice exporter, shipping 9.5 million tons to the global market, which was 30 million tons in 2007.

But last year, Vietnam placed limits on rice exports in order to meet domestic demand, triggering a spike in the price of its grain in the world market. The ban stemmed from national food security concerns in the communist-ruled country. Hanoi wanted to avoid a local food shortage due to flooding in the rice-growing central regions.

Yet, such a weather-related feature, which some are attributing to climate change, was only one reason to push global rice prices to new heights. Another trigger includes the steady rise in oil prices, making fertilizer more expensive, pushing the cost of harvesting up, and increasing the cost of transporting the grain.

A weakening US dollar has also been singled out as a reason, in addition to demand from the increasingly affluent China for more food to feed its population. In 2007, China marked a shift away from being a net exporter of rice and wheat, raising the export taxes on the grains to keep local produce at home. In the meantime, import tariffs were removed for easier access to the two staples from the world market.

And the prospect of early relief for the world's poor for cheaper rice this year appears remote. "It is very likely that the price of rice will drop this year. The prices will not stabilize until the end of 2008," says Sumiter Broca, policy officer at the Food and Agriculture Organization's (FAO) Asia and Pacific regional office, based in Bangkok.

But the price of rice, which rose by 40% last year, is not an exception. "This time around, all other commodity prices have also risen, like cereals, vegetable oils, meat, sugar and bananas," added Broca in an interview. "It is part of a natural long-term trend, but this time the peak is worrying. There is no reason for any let up in this price increase in the future."

The current rise in rice prices began in 2002, following a six-year downward trend. Yet at the same time, rice stocks today are "at an all time low; the lowest in 20 years", says Broca of a grain whose major producers are Bangladesh, China and India. The world's total rice output reached 420 million tons during the 2007-08 harvest season, with the end of season stocks being 102 million ton for the same period, down by 1% from the 2006-07 harvest.

This means that in Asia, the world's largest rice-growing region, rice production is "increasing very slowly, [with] rice production in 2007 [being] only 0.5% higher than in 2006", states the FAO. "A major underlying reason for this is that yield growth is plateauing."

Land, too, is limited to increase rice cultivation to meet new demand for the grain from Africa, Latin America and the Middle East. And as China's rice story reveals, land that was once allocated for rice has been taken away from farmers to meet the country's other economic needs. China's rice growing area saw a three-million-hectare loss during a decade, beginning in 1996, because of "economic pressure", states the latest issue of the Rice Today magazine.

"Although there may be some potential for expansion of rice area in other countries, the total area in Asia will unlikely increase much beyond the current estimate of 136 million hectare," writes Sushil Pandey, of the International Rice Research Institute (IRRI), in the magazine. "Rice production is facing increasing competition for land, labor and water from other economic activities and the recent growth in biofuel production is likely to exert additional pressure."

Consequently, organizations like the IRRI, based in the Philippines town of Los Banos, are making a push for a repeat of the Green Revolution (1968-81), during which high yield varieties of rice were distributed to increase rice output by 42% over a 13-year period. "A second Green Revolution to reverse the rising trend in rice prices and to keep process low is needed now as much as the first Green Revolution was needed earlier to avoid famine and mass starvation," Pandey argues.

Yet activists who work with local farming communities are not impressed with such a call. "We are cautious about such solutions, because hybrid rice depends on a lot of water and is only grown in irrigated areas. This isolates the other farmers," says Neth Dano, a research associate at Third World Network, a Penang-based think-tank. "There has also been much hype about GE [genetically engineered] rice for the last 10 years, but we have not seen a good product."

A better route, she told IPS, is for governments to increase investments for local farmers to produce better rice yields. "Governments are not doing this; these farmers are neglected financially. It is these farmers that best know the rice varieties that need to be produced now.''

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