I usually don't pay close attention to the price of rice, but it's hard to avoid picking up snippets in the news: there is a rice shortage (in Asia) and therefore prices of rice are going up. I idly mentioned it in passing to an Indian colleague today and he nodded. "Yeah, price of basmati rice has gone up about 50%."
Damn. And we had just run out of rice.
Thus, slightly apprehensive, we went out after dinner to buy rice at our favorite Korean supermarket. Turned out, the price of rice is still the same -- the brand of Japanese rice we usually buy costs about $3.40/kg. Then again, the 'Japanese' rice we buy is actually from the US, not Asia.
So, is the price of rice going up? And, is there really a world shortage? Mike is of the opinion that it's all speculation and rampant capitalism, while I thought it's a combination of a rice shortage and consumer panic.
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Since the 31st of March 2008, India, the world's second largest rice producer, has already imposed a ban on non-basmati rice exports to ensure the country had enough rice to feed its own population, which number over a billion. The price for exports of basmati rice has also been raised to USD1200 per ton, up from USD650 per ton at the beginning of March. Other countries that have banned the export of rice this year include Indonesia, Vietnam, Egypt, India and China. Given that these countries are among the biggest producers of rice in the world -- Thailand and Vietnam alone account for half of the world's exports -- does this mean there is a severe rice shortage?
This may not be the case. Thailand, the world's largest rice producer, not only has sufficient rice but has recently begun to release its stockpile of rice, temporarily pushing down the prices of rice.
(As an aside: after that particular piece of news this week, the price of Thai rice fell by 1000 baht to 25,000 baht (USD791) a ton. In contrast, farmers get paid about 7000 baht a ton, and their fixed cost is 5000 baht a ton. Their work is certainly more back-breaking than the middle-man. Sounds terribly unfair, isn't it?)
However, it was not as if prices of rice, and associated tensions, have suddenly erupted in the past couple of months. Wholesale prices of rice in Canada have more than doubled during the past year. India's government has initially imposed a ban on non-basmati rice exports last October but lifted it following protests from exporters. India reintroduced the ban again this year as inflation hit a 14-month high.
All these rising prices -- Asian rice prices have almost trebled this year -- have hit the countries who can least afford it the hardest; countries such as the Philippines, Indonesia and Bangladesh. More affluent countries like South Korean, Singapore and Japan are better able to afford the increase in prices, though they still feel the pinch.
Damn. And we had just run out of rice.
Thus, slightly apprehensive, we went out after dinner to buy rice at our favorite Korean supermarket. Turned out, the price of rice is still the same -- the brand of Japanese rice we usually buy costs about $3.40/kg. Then again, the 'Japanese' rice we buy is actually from the US, not Asia.
So, is the price of rice going up? And, is there really a world shortage? Mike is of the opinion that it's all speculation and rampant capitalism, while I thought it's a combination of a rice shortage and consumer panic.
---
Since the 31st of March 2008, India, the world's second largest rice producer, has already imposed a ban on non-basmati rice exports to ensure the country had enough rice to feed its own population, which number over a billion. The price for exports of basmati rice has also been raised to USD1200 per ton, up from USD650 per ton at the beginning of March. Other countries that have banned the export of rice this year include Indonesia, Vietnam, Egypt, India and China. Given that these countries are among the biggest producers of rice in the world -- Thailand and Vietnam alone account for half of the world's exports -- does this mean there is a severe rice shortage?
This may not be the case. Thailand, the world's largest rice producer, not only has sufficient rice but has recently begun to release its stockpile of rice, temporarily pushing down the prices of rice.
(As an aside: after that particular piece of news this week, the price of Thai rice fell by 1000 baht to 25,000 baht (USD791) a ton. In contrast, farmers get paid about 7000 baht a ton, and their fixed cost is 5000 baht a ton. Their work is certainly more back-breaking than the middle-man. Sounds terribly unfair, isn't it?)
However, it was not as if prices of rice, and associated tensions, have suddenly erupted in the past couple of months. Wholesale prices of rice in Canada have more than doubled during the past year. India's government has initially imposed a ban on non-basmati rice exports last October but lifted it following protests from exporters. India reintroduced the ban again this year as inflation hit a 14-month high.
All these rising prices -- Asian rice prices have almost trebled this year -- have hit the countries who can least afford it the hardest; countries such as the Philippines, Indonesia and Bangladesh. More affluent countries like South Korean, Singapore and Japan are better able to afford the increase in prices, though they still feel the pinch.
Why have the prices of rice increased so dramatically? In short:
1/ Export curbs by countries such as India, Egypt, Vietnam, Brazil and Indonesia.
2/ Stockpiling by countries such as Bangladesh, the Philippines and Costa Rica, to meet domestic shortfalls, which were due to various reasons such as crop losses. Singapore, being kiasu, said that it would "allow rice importers to bring in more stock to meet increased demand amid consumer fears of a rice supply crunch and higher prices".
3/ Falling world inventories, which have dropped by nearly 50% since 2000/01.
4/ Speculative buying; financial speculators looking for the next big commodity play have increased prices by about 80% this year. Hoarding by consumers has also fed the rise by spurring importers to seek supplies sooner.
5/ Less crops, less land and fewer farmers. Land normally set aside for crops are being taken over by industrialization and urban development; in China for instance, the land used for growing rice fell from 37 million hectares in 1976 to 31 million hectares in 1996. Current farmers are getting older and younger people don't want to be farmers; for example, the number of rice farmers in Korea fell by two-thirds between 1965 and 1995.
6/ Growing demand; global consumption of rice has risen by 2.7% over the past five years.
(BBC has a nice pictorial summary of rising food prices, including rice, here.)
Knowing all these, should we buy more rice, i.e. hoard? After all, there are only three scenarios: (1) hoard, because the price IS going up, regardless of a real or perceived shortage; (2) ignore and behave as usual, absorb the price increase because it won't bankrupt us; or (3) eat less rice. The last option might not work because prices of staples everywhere is increasing; the increase in wheat prices over the past year is higher than the increase in rice prices. Bread prices in Canada have risen about 50% over the past month -- it might actually be cheaper to buy and eat more rice!
1/ Export curbs by countries such as India, Egypt, Vietnam, Brazil and Indonesia.
2/ Stockpiling by countries such as Bangladesh, the Philippines and Costa Rica, to meet domestic shortfalls, which were due to various reasons such as crop losses. Singapore, being kiasu, said that it would "allow rice importers to bring in more stock to meet increased demand amid consumer fears of a rice supply crunch and higher prices".
3/ Falling world inventories, which have dropped by nearly 50% since 2000/01.
4/ Speculative buying; financial speculators looking for the next big commodity play have increased prices by about 80% this year. Hoarding by consumers has also fed the rise by spurring importers to seek supplies sooner.
5/ Less crops, less land and fewer farmers. Land normally set aside for crops are being taken over by industrialization and urban development; in China for instance, the land used for growing rice fell from 37 million hectares in 1976 to 31 million hectares in 1996. Current farmers are getting older and younger people don't want to be farmers; for example, the number of rice farmers in Korea fell by two-thirds between 1965 and 1995.
6/ Growing demand; global consumption of rice has risen by 2.7% over the past five years.
(BBC has a nice pictorial summary of rising food prices, including rice, here.)
Knowing all these, should we buy more rice, i.e. hoard? After all, there are only three scenarios: (1) hoard, because the price IS going up, regardless of a real or perceived shortage; (2) ignore and behave as usual, absorb the price increase because it won't bankrupt us; or (3) eat less rice. The last option might not work because prices of staples everywhere is increasing; the increase in wheat prices over the past year is higher than the increase in rice prices. Bread prices in Canada have risen about 50% over the past month -- it might actually be cheaper to buy and eat more rice!
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