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High prices here to stay: experts

High prices here to stay: experts

 

"It is part of a natural long-term trend, but this time the peak is worrying. There is no reason for any let up in this price increase in the future.” 

Soaring global rice prices are hitting the stomachs of Asia's poorest citizens in a trend experts see little

chance of reversing in the near future.

The people of East Timor have

just been told they may not receive their annual quota of food aid. "We have

been forced to provide less food to East Timor; provide less rice than we

intended to,” said Paul Risely, Asia spokesperson for the United Nations food

agency. "We have requested the people of East Timor

to look for local substitutes.”

Part of the problem stems from poor planning, with the Dili

government urging the World Food Programme (WFP) to step in only after finding

that it could not afford to purchase sufficient quantities of the grain from

Vietnam due to high prices.

Vietnam,

the world's second largest exporter of rice behind Thailand, has been a major supplier

of rice for the WFP’s global program.

But last year Vietnam placed limits on rice

exports in order to meet domestic demand, triggering a spike in the price of

its grain in the world market. Hanoi

wanted to avoid a local food shortage due to flooding in the rice-growing

central regions.

Yet, such a weather-related feature, which some are

attributing to climate change, was only one factor pushing global rice prices

to new heights. Another trigger includes the steady rise in oil prices, making

fertilizer more expensive, pushing the cost of harvesting up, and increasing

the cost of transporting the grain.

A weakening US dollar has also been singled out as a reason,

in addition to demand from the increasingly affluent China for more food to feed its

population. In 2007, China

marked a shift away from being a net exporter of rice and wheat.

And the prospect of early relief for the world's poor for

cheaper rice this year appears remote.

"The prices (of rice) will not stabilize until the end of

2008,” says Sumiter Broca, policy officer at the Food and Agriculture

Organization's (FAO) Asia and Pacific regional office, based in Bangkok.

But the price of rice, which rose by 40 percent last year,

is not an exception.

"This time around, all other commodity prices have also

risen, like cereals, vegetable oils, meat, sugar and bananas,” said Broca. "It

is part of a natural long-term trend, but this time the peak is worrying. There

is no reason for any let up in this price increase in the future.”

The current rise in rice prices began in 2002, following a

six-year downward trend.

Yet at the same time, rice stocks today are "at an all time

low; the lowest in 20 years,” says Broca.

"A major underlying reason for this is that yield growth is

plateauing,” states the FAO.

Land, too, is limited to increase rice cultivation to meet

new demand for the grain from Africa, Latin America and the Middle

East. And as China's

rice story reveals, land that was once allocated for rice has been taken away

from farmers to meet the country's other economic needs.

"Although there may be some potential for expansion of rice

area in other countries, the total area in Asia

will unlikely increase much beyond the current estimate of 136 million hectares,”

writes Sushil Pandey, of the International Rice Research Institute (IRRI), in

the latest issue of the Rice Today

magazine.

"Rice production is facing increasing competition for land,

labor and water from other economic activities and the recent growth in biofuel

production is likely to exert additional pressure,” she says.

Consequently, organizations like the IRRI, based in the Philippines,

are making a push for a repeat of the Green Revolution (1968-81), during which

high yield varieties of rice were distributed to increase rice output by 42

percent over a 13-year period.

Yet activists who work with local farming communities are not

impressed with such a call. "We are cautious about such solutions, because

hybrid rice depends on a lot of water and is only grown in irrigated areas.

This isolates the other farmers,” says Neth Dano, a research associate at Third

World Network, a Penang-based think tank.

"There has also been much hype about GE (genetically

engineered) rice for the last 10 years, but we have not seen a good product.”

A better route, she said, is for governments to increase

investments for local farmers to produce better rice yields.

"Governments are not

doing this; these farmers are neglected financially. It is these farmers that

best know the rice varieties that need to be produced now.” (IPS)

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