MercoPress. South Atlantic News Agency

Rice prices become a ticking time bomb for Asian countries

The spiral in rice world prices has become an extraordinary source of revenue for exporters Thailand and Vietnam but for the rest of Asian countries is a ticking time bomb that could lead to social chaos. Rice is the staple food for hundreds of millions in Asia and the Pacific basin.

"Rice is an extremely sensitive product for any government. The sustained increase of the price will spur social disturbances and social chaos", warns Loren Lagarda, president of the Economic Affairs Committee of the Philippines' Senate. The almost 90 million inhabitants of Philippines consume 33.000 tons of rice daily, which means to that to keep prices subsidized Manila will have to acquire 1.8 million tons in the international market when prices have zoomed from 400 US dollars a ton in late January to over 700 US dollars currently. "It's not likely that prices will go back to as low as we're used to" said Abdolreza Abbassian, economist and secretary of the Intergovernmental Group for Grains for the U.N. Food and Agriculture Organization. "Currently if you're in any of these countries, unless the government is subsidizing consumers, consumers have no choice but to cut consumption. It's a very brutal scenario, but that's what it is". In the long term, prices are expected to stabilize. Farmers will grow more grain for both fuel and food and eventually bring prices down. Already this is happening with wheat, with more crops to be planted in the US, Canada and Europe in the coming year. However, consumers still face at least 10 years of more expensive food, according to preliminary FAO projections. Among the driving forces are petroleum prices, which increase the cost of everything from fertilizers to transport to food processing. Rising demand for meat and dairy in rapidly developing countries such as China and India is sending up the cost of grain, used for cattle feed, as is the demand for raw materials to make bio-fuels. The increase in rice prices is stronger than that experienced by wheat, soy and other basic products in the last three years because of higher demand, a jump in fuel prices, climate change and the gradual disappearance of rice paddies. "It's a combination of higher demand, a lesser provision because of a fall in Thailand and Vietnam crops, climate warming and because farmers prefer to plant other crops", said Chookiat Ophaswonse, president of the Thailand Association of Rice Exporters. Only in Vietnam between 2001 and 2007, over half a million hectares of rice paddies have been lost and another 125.000 hectares were covered by cement because of urban and industrial sprawl. "In five years the loss of rice paddies will be equivalent to the current volume of exports which means we'll have no extra rice for export and food security is threatened", said Agriculture minister Cao Duc Phat from Vietnam. Thailand and Vietnam that together represent 50% of world rice exports, last year shipped 9.5 and 4.5 million tons last year of the total 28 million traded in world markets. Something similar is happening with Cambodia farmers who are selling their land to companies involved in real estate and urbanizing expanding cities and towns. "We'll soon be short of paddies and food prices will boom becoming a lag for the country", warned Kit Seng Planning Officer of Cambodia's Agriculture Ministry. Indonesia is not immune to the Asian situation and last year was forced to import 1.5 million tons of rice to feed its 230 million people. In Bangladesh the price of grains is already far beyond the means of 40% of its 144 million population. "It's imperative to upgrade farming and productivity", underlined Ifzal Ali, economist from the Asian Development Bank located in Manila.