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Rice Production To Hit Record High '08, Prices Up

Rice production to reach record high in 2008, but prices to continue climbing - UN

12 May 2008 - Rice production in Asia, Africa and Latin America will reach record highs in 2008, but prices could also continue to soar in the short term, the United Nations Food and Agriculture Organization (FAO) reported today.

The agency's preliminary forecasts show harvests surging by 2.3 per cent and reaching an all-time high of over 600 million tons, but prices will remain high in the immediate future because a large portion of this year's crop will only be harvested at the end of 2008.

However, FAO warned that the destruction of Myanmar's food basket by the devastating Cyclone Nargis which struck the South-East Asian nation last week could lead to a worsening of the global rice production outlook.

The cyclone - which flooded rice-growing areas and destroyed several warehouses and stocks - hit Myanmar as paddy farmers were harvesting their dry season crops, which accounts for 20 per cent of annual rice production.

Prices of rice in Rangoon have skyrocketed by 50 per cent, and if the country turns to neighbouring countries such as Thailand and Viet Nam for imports, this could lead to a further upwards pressure on global prices. According to the FAO Rice Price Index, international prices soared by 76 per cent between December 2007 and April 2008.

"Prices are expected to remain extremely firm, at least until the third quarter of 2008, unless restrictions on exports are eased in the coming months," said FAO rice expert Concepcion Calpe.

In a bid to prevent shortages in their own countries, major rice exporters have recently set export bans, taxes or ceilings.

"These measures further restricted the availability of rice supplies on international markets, triggering yet more price rises and tighter supply conditions," Ms. Calpe said, noting that Thailand, Pakistan and the untied States are the only leading exporters selling rice overseas without any constraints.

The rising price of fertilizer, pesticides and fuel are also contributing to the soaring prices, and favourable weather conditions are needed for them to fall from their current levels.

Average rice consumption worldwide is predicted to rise by 0.5 per cent to 57.3 kilos per year, and despite the rising prices, consumers have been seen to shift away from more expensive foods, such as meat and meat products.

The skyrocketing of prices has revealed other medium-term limitations, including the low level of investment in agriculture, limited funding for agricultural research and environmental problems.

ENDS

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