Rice prices highest in 20 years

Rice prices highest in 20 years


The Food and Agricultural Organization (FAO) rice price index (with 2000 as base year) reached 142 in October 2007, the highest in 20 years. In 2007, the rice price index was up 16 percent over 2006. Yet, says FAO, the rise was small compared with agricultural commodities such as wheat and dairy products.

Rice available for trade is now limited, 30 million tons, a measly 1.7 percent increase from 2006. Egypt imposed an export tax on rice, India restricted non-basmati rice export, Viet Nam imposed export quotas.

FAO notes increased imports by Bangladesh, North Korea, Indonesia, Nepal and the Philippines “which would help them overcome severe domestic supply shortages, and in some cases, would be reaching them in the form of food aid.” Thailand is the only country with ample rice supplies for export.

The aromatic Japonica rice rose 24 percent, reflecting limited supplies in India and Pakistan. Export prices of lower quality Indica rice were up 18 percent. Major rice producers China and Pakistan have increased prices while large exporter Vietnam has restricted exports. India, a key player in the international rice market, has imposed an indefinite ban on export of non-basmati rice and pegged its minimum price at $425 a ton.

FAO predicts that “unless the sizes of the crops soon to be harvested are much larger than currently foreseen world rice prices could undergo further increases in the next few months.”

Global paddy production was estimated in 2007 at 643 million tons (429 million tons in rice terms), up marginally over 2006. World average paddy yield remain at 4.1 tons per hectare. In Asia, paddy production was estimated in 2007 to be 585 million tons, up just three million tons.

Bangladesh, China, India, Indonesia, and Myanmar showed large production gains in 2007 but Japan, the Philippines, Sri Lanka, Turkey and Vietnam suffered contractions, says FAO.

The volume of rice held by the five largest rice exporters, India, Pakistan, Thailand, Viet Nam and the US is almost the same as in the previous season.

Their rice inventories would cover 16.3 percent of their own rice disappearance (domestic consumption plus export) in 2007/08, down from the previous year, “a sign that world market conditions may remain tight in 2008.”
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