Rice supplies set to fall to 25-year low
World supplies of rice are reaching dangerously low levels after stores of South Asia's staple food fell to a 25-year low and governments battled to stabilise domestic markets.
The US Department of Agriculture is predicting global rice stocks will fall to about 70 million tons this year, the lowest level since the early 1980s and half the level in 2000.
Earlier this week, the Philippines failed in an attempt to buy rice to boost its inventories.
Traders offered to sell the country only 325,000 tonnes when it wanted to buy 550,000 tonnes. The average offered price, of nearly $680 a tonne was up more than 40 per cent from January.
"Our population is growing and arable land is being converted to other uses so we cannot cope with demand," a spokesman for the Philippines National Food Authority said.
Similar trends have emerged in other large rice-eating countries such as China, where large amounts of farm land has been turned to industrial uses.
In Indonesia, one of the world's biggest producers, rice production has been outpaced by population growth for more than a decade, according to the country's Centre for Economics and Social Studies.
Eyeing dwindling global stocks, countries including India have placed restrictions on exports and the US Department of Agriculture has given warning that more curbs are expected.
Despite a tenfold hike in rice prices in some local markets over the past year, social unrest has been kept at bay partly because most of the increases have been gradual, analysts say.
However, most of the world's rice crops are consumed by the countries that produce them, which means the global market in rice is relatively thin and prone to violent swings.
Jonathan Pincus, the UN Development Programme's chief economist in Vietnam, said: "One big increase in imports from a large country such as India could lead to a big spike in prices. This is the danger."
He said: "Historically, every Asian government has shown it is very aware of the close relationship between political stability and the stability of the rice market."
Other countries are profiting from the boom in the rice market, which is occurring against a background of global food price inflation embracing foodstuffs ranging from wheat to edible oils.
In January and February, Vietnam, one of the world's largest exporters, made $150 million through rice exports, an increase of nearly 80 per cent from a year ago.
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