Asian countries clamp down on rice trade

By Jess Halliday

- Last updated on GMT

Related tags Rice Sri lanka

The rapidly rising price of rice continues to cause concern at
government, industry and consumer level this week, as the
Philippines has sought to buy in supplies, Indonesia has
implemented a ban on overseas sales, and US rice futures reached an
all-time high.

Rice prices have increased by 66 per cent between March 2007 and March 2008, reaching around US$546 per tonne for high quality Thai B rice. If Asia, the world's rice bowl, is struggling to get hold of sufficient supplies for consumption by its own populations, the situation certainly does not bode well for food manufacturers in Europe and the US, who will find their margins hard pressed by higher prices. Chicago Board of trade rice futures for July have risen to an all time high of $23.375 - a development linked to a poor response from The Philippines' tender to buy in half a million tones of rice. According to Reuters​ news agency, the country has received offers to sell only two-thirds the amount sought, for between $872.50 and $1220 per tonne including freight. Philippines president Gloria Macapagal-Arroyo has also signaled that legal action will be taken against hoarding or diversion of supplies or perversion of prices. Criminal complains were brought against 13 rice traders. Other developments in Asia this week include Indonesia introducing a ban on exports of rice if national stocks have a surplus of over 3m tonnes. Similar measures have also been introduced in India, Egypt and Vietnam. In Sri Lanka the first ever control on rice prices has been imposed in an effort to counter the effects of rice hoarding. According to online newspaper ColomboPage​, trade, commerce, consumer affairs and market development minister Bandula Gunawardena said that illegal stocking of rice has pushed prices up to Rs 150 per kilo. "The current price increase seen in the local market is artificial and is putting both the farmer as well as the consumer in trouble,"​ he said. The price limits range from Rs 63 per kilo at wholesale and Rs 70 at retail for Samba rice, to Rs 48 at wholesale and Rs 55 at retail for white kekulu. The Sri Lankan government is also planning to keep contingency stocks, but its storage space is currently limited - a situation it plans to rectify. Meanwhile, in Haiti, consumers have said that measures taken by the government to reduce rice prices are not enough, since other commodity prices are still high. In the last two weeks at least six people have been killed in rioting related to food prices. In response, president Rene Preval has cut a deal with rice importers to cut prices by about 15 per cent. The increase in rice prices has been attributed to a number of factors, including climate, oil prices, and biofuels. According to FAO personnel, price increases of wheat and other grains have had a knock-on effect on rice prices, since people have switched from wheat to rice to save money. The effect, of this, however, is that rice demand increase - and with it, the price of that grain too. Some good news has come out of Bangladesh this week however, as the rice harvest now underway looks to produce a bumper crop. This expectation has had an immediate effect on prices, as hoarders have been prepared to sell some of their stocks to make way for new stocks. The FAO said earlier this month that world rice production is expected to rise almost 2 per cent this year, easing the current tight supply and bringing downward pressure on prices. However senior economist senior economist Concepcion Calpe told it will be two or three years before prices drop significantly. "We may see a little fall in prices when new supplies come onto the market but it won't be sufficient to bring them back to last year's price." ​According to FAO's latest estimates, paddy production rose by 1 per cent in 2007 to 650 million tonnes. It is the second consecutive year where production growth fell short of population growth.

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