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March 20, 2008

Rising rice prices cause global shocks

As the price of rice hovers near record levels, many poor countries face the spectre of riots by hungry people, according to one of the world's leading rice experts.

Key producers India and Vietnam have both curtailed exports, sending some of the world's largest rice importers including the Philippines scrambling to procure supplies for their people.

Spot prices have recently hit more than 700 dollars a tonne, more than three times the price of just five years to go.

Industry officials in Thailand, the world's top exporter, have warned that prices could soon rise to 1,000 dollars a tonne.

Vietnam, the world's third-largest exporter of the grain, also faces the prospect of a return of the deadly crop disease that impacted heavily on its crop yield last year.

These are just some of the problems that keep Robert Zeigler, head of the International Rice Research Institute (IRRI) up late at night. Located at Los Banos, a university town south of Manila, IRRI is regarded as the one of the world's premier centres for rice research.

Looking out across paddy fields from his office, Zeigler quoted a Latin American saying: "When the price of rice rises, governments fall."

"If people don't have enough to eat and they don't have enough money to buy enough to eat, that translates frequently into social unrest," he said. "If you look at some of the changes that have taken place in governments in Asia over the last several decades, they have been associated with food shortages."

The Bangladesh cyclone, flooding in Java, a plague of pests and virus in Vietnam, and surging demand from explosive economic growth in China and India, the world's principal rice producers and consumers, have drained global stocks, the US-born expert said.

"I worry about Indonesia because they've been trying to source rice," Zeigler said. "I'm concerned about just about every country in Africa, because they're all major rice importers and rice has become a staple. A few years ago, rice was a luxury for them."

New Delhi raised its export price recently to 750 dollars a tonne while Vietnam has been "slow to release licenses for export" after blocking exports in mid-2007, Zeigler said. He said there was a real threat of social unrest in Bangladesh as floods have virtually wiped out its entire rice harvest. And he warned: "It's not in India's national security and interest to have instability in Bangladesh."

Zeigler said recent supply shocks were being compounded by longer-term pressures as land is converted for houses and factories, while water is diverted for industrial use -- not to mention climate change.

When IRRI was established in 1960 it developed high-yielding, short-stemmed rice varieties which heralded the so-called Green Revolution, boosting global output, cutting food prices and lifting hundreds of millions of rice-eating Asians out of poverty.

But now there are two billion more people to feed on essentially the same area of farmland, Zeigler said.

Government investments in farm research and infrastructure, including irrigation, have plunged to "well under half" of pre-Green Revolution levels, he said. "The world took abundant food for granted and ignored this whole set of factors that were coming into play."

Yield growth has also flattened out as populations have soared, and policymakers were blind-sided by the rise of the biofuels industry that took away more farm land, and grains themselves, from the food chain.

"Now we're paying the price of complacency," Zeigler said.


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