From the WSJ (sub. req.)
BANGKOK — As rice prices hit new highs, farmers across Asia are hoarding their crops, raising the prospect of a shortage in Asia and Africa that could lead to widespread unrest.
Rice prices in Asia have doubled since the beginning of the year, driven higher by rising demand, a steady depletion of government stockpiles and a pest outbreak in Vietnam, the world’s second-largest exporter after Thailand.
On Thursday, medium-grade rice exported from Thailand — a de facto market benchmark — reached $760 a metric ton, up from $360 a ton at the end of last year.
Governments around the region are curbing exports to safeguard their domestic supply, putting further upward pressure on prices.
Protests have broken out in several countries, including Guinea, Egypt and the Philippines, as prices of basic foodstuffs soar. The situation is exacerbated by higher fuel costs, which add to the cost of shipping food, as well as dwindling government stockpiles. The U.S. Department of Agriculture predicts global rice stocks will fall to their lowest level in 25 years in 2008.
In China, the government said it will pay farmers more for rice and wheat and has frozen the retail prices of rice, cooking oil and other goods in an effort to rein in food costs that jumped 23.3% in February from a year earlier.
In the Philippines, the world’s biggest importer of rice, President Gloria Macapagal-Arroyo is considering a moratorium on converting agricultural land for building housing developments or golf courses. Her cabinet ministers are urging fast-food restaurants to offer half-portions of rice in order to cut down on the country’s rice bill.
Rice prices trundled along at a relatively low level earlier in the decade after global rice inventories hit 150 million tons in 2000. Rice traded at under $300 a ton until 2006. The price increases began accelerating in the fourth quarter last year when widespread flooding in Vietnam and the Philippines stoked demand when inventories were falling.
Continuing growth in China, India and other parts of the developing world has placed an additional strain on the world’s food supplies as their increasingly wealthy populations increase their food intake.
Urbanization has encouraged much wider consumption of rice, too, because it is easier to store, more nutritious and easier to prepare than many other staple foods. Many countries in sub-Saharan Africa have begun switching to rice over the past 20 years, taking up a greater portion of the rice exported from Thailand and Vietnam.