MUMBAI - An Indian government ban of rice
exports has plunged neighboring Bangladesh into
crisis, in a grim preview of growing global grain
shortages. Leading rice-exporting nations such as
India and Vietnam are reducing sales overseas to
check domestic price rises. Previously healthy
buffer stocks in the world's largest rice
exporter, Thailand, are shrinking.
The
February 7 ban by India's Ministry of Commerce and
Industry intensifies a worldwide rice shortage
that according to the Rome-based United Nations
Food and Agriculture Organization drove up prices
by nearly 40% last year. Large rice importers such
as Myanmar, Afghanistan, Pakistan, Bangladesh,
Indonesia and Malaysia are worst affected.
An additional 50 million tonnes of rice is
needed each year up to
2015
to plug the demand-supply gap, according to the
Manila-based International Rice Research Institute
(IRRI), equivalent to a 9% annual production
increase from current levels of 520 million
tonnes.
Intensifying price pressures,
additional agricultural land for growing rice, a
dietary staple for more than half the world's 6.6
billion people, is extremely limited, say
analysts, while rice consumption is growing
worldwide and wheat stocks are hitting record
lows. The US Department of Agriculture has
reported three-decade lows in wheat stocks, and
India - Asia's largest wheat producer - expects
lower production for 2008.
Unregulated
private cross-border trading makes exact figures
hard to come by, says Duncan Macintosh, director
of the IRRI, told Asia Times Online from his
Manila office. "Besides, Asian governments have a
strategic interest in rice stocks and any declared
shortage will send prices shooting up," Macintosh
says.
India's rice export ban seems born
out of such price rice fears, and comes at a
sensitive time ahead of the final annual budget to
be presented by the ruling United Progressive
Alliance government on February 28 before the
country's general election next year.
India's ban on rice exports follows a
gradual limiting by the government of exports over
the past few months. In October 2007, rice exports
priced under $425 per tonne were banned and on
December 31 the floor price rose to $505 a tonne.
The February 7 ban extended to all exports
of rice except government-to-government trading,
but excludes exports of basmati rice, a more
fragrant, long-grained and expensive variety. The
government will supply a previously committed
500,000 tonnes of non-basmati parboiled rice to
Bangladesh at an average of US $399 per tonne,
excluding insurance and freight.
The
exemption was not much consolation to Bangladesh,
which desperately needs food grains after Cyclone
Sidr in December destroyed $600 million worth of
the country's rice crop. Rice prices soared 70%,
hitting hard a population in which the majority
survive on less than $1 a day. In the rare years
that the country is free of climatic disasters,
Bangladesh produces 28 million tonnes of food
grains, meeting 95% of domestic needs.
To
cope with the rice crisis, the Bangladesh
government in January floated global tender
notices for 300,000 tonnes of various varieties of
rice. The country is also importing 180,000 tonnes
of white rice from neighboring Myanmar.
The Kolkata-based national daily The
Statesman reported that India's export ban caused
300 rice trucks to be stranded in India-Bangladesh
border zones such as Mahedipur land customs
station in English Bazaar and other land ports in
West Bengal. Rice traders on both sides face
losses and are threatening to take to the streets
if the Indian government does not reconsider the
ban.
Worse, in a repeat of a disaster that
last struck in 1959, a famine threatens remote
areas of southeast Bangladesh after millions of
rats devastated food crops as the rodents
reproduced in dramatic numbers following a
flowering of bamboo forests that happens every 50
years.
The rat breeding out-paces the
bamboo flower growth, and soon the animals turn to
ravaging rice stalks and vegetables in the
affected region. Northeastern India has been
similarly hit after bamboo forests in Mizoram
began blossoming in 2007. Local authorities
declared the area a disaster zone but the Indian
government has not yet announced plans to combat
this bi-century rat storm.
Long-term
trends and short-term shocks are both putting
pressure on rice prices. Higher incomes across
Asia are leading to increased consumption of
grains and vegetables and of meat, which leads to
more grain being diverted for use as cattle
fodder. Production of biofuel further squeezes
supply, while the drift off the land by workers
and into industry curbs the supply of labor.
"There is less land, less water and less
labor available for rice growing across Asia,"
says Macintosh. "Agricultural labor in countries
like Thailand is increasingly shifting to
industrial sectors. And rice is the most labor-
and water-intensive crop."
In the shorter
term, prices can spike as natural disasters
ranging from severe drought and floods cause havoc
on agriculture. The recent three-week snow storms
in China caused $7.5 billion in damages, according
to early government estimates, including
destruction of winter crops leading to a $700
million relief package for farmers.
Asian
countries are making different responses to
domestic and international demand. Vietnam in the
third quarter last year suspended exports to
protect domestic needs amid insect epidemics,
while in the other direction Thailand plans to
auction an additional 500,000 tonnes of rice to
cater to increasing international demand,
particularly from Bangladesh and Pakistan.
Thailand exported 800,000 tonnes of rice in
January 2008, a 25% year-on-year increase.
As a long-term measure, food scientists
are developing sturdier varieties of rice that can
withstand climate challenges as well as higher
yielding seeds.
Asia averages 3.6 tonnes
of rice per hectare, according to the IRRI. Better
yielding varieties will increase average output to
six tonnes per hectare, particularly in Thailand,
which grows rice across 9.8 million hectares but
has the lowest rate of output in Asia - 2.6 tonnes
of rice yield per hectare in the planet's largest
area of land made available for rice cultivation.
In contrast, China's produces six tonnes of rice
per hectare and Japan has the global record at 6.2
tonnes.
The world's leading
philanthropists are pitching in to combat the
rising grain crisis, similar to supporting cancer
and AIDS research. Leading the way, Microsoft
chairman Bill Gates in January announced a grant
of $19.9 million over three years to the IRRI. The
grant from the Bill and Melinda Gates Foundation
aims to first help 400,000 small farmers in South
Asia and sub-Saharan Africa access improved rice
varieties and better growing technology.
Farmers may increase yields by 50% by
2018, but "there are no short-term solutions,"
says Macintosh of the IRRI.
(Copyright
2008 Asia Times Online Ltd. All rights reserved.
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