ASIA: Rising Rice Prices Threaten Aid Programmes

By Larry Jagan Reprint | | Print |

Larry Jagan

BANGKOK, Apr 1 2008 (IPS) - Rising rice prices are threatening to derail aid programmes run by international agencies while several governments on the continent are taking steps to see that shortages of the staple do not translate into social unrest and food riots.

Rice prices have more than doubled throughout the region within the last two months. In some countries, including Thailand, consumers are stocking up in panic, while many growers are hoarding their stocks in the hope of getting better prices for their grain in the coming months.

International agencies, including the United Nations’ World Food Programme (WFP), are increasingly concerned that food aid may have to be severely reduced if more funds are not found quickly. In many countries the price of rice seems to be rising daily.

In Bangkok, shoppers have begun to buy more than they need for their immediate needs for fear that the supermarkets are going to run out of stocks soon. Niratcha Sunthonsak, a 20-year-old single parent who has to support her two-year-old son and 50-year old mother, told IPS that she is frightened about the future. She is buying up as much as she can every day.

“Rice has more than doubled since the beginning of the year,” she complained. “Everything is more expensive, but my salary has not increased,” she said. “I have hocked my jewellery (with the pawn broker) to buy extra supplies this week. If the price continues like this I don’t what I will do – I already can’t take my son to the dentist or doctor,” she moaned.

Throughout Asia the story is the same. Last week, the Cambodian government urged citizens not to panic buy or hoard rice. Many governments have begun to take precautions and ban exports of rice to cool down the market.

In the past few weeks leading rice exporters, including Egypt, India and Pakistan, have halted almost all exports of rice, at least for the time being, while China and Vietnam have drastically reduced their exports.

“By stabilising your domestic market you are basically exporting the instability abroad,” said Sumitr Boca, a policy officer with the Food and Agriculture Organisation’s regional headquarters in Bangkok.

World stocks of grain are at their lowest for more than 20 years, according to agricultural experts. Rice is at its lowest since 1976.

And there is no end to the crisis in sight. “I don’t think we’ll see (rice) prices fall precipitously any time soon,” said Ted James, the principal economist at the Asian Development Bank in Manila.

But many aid experts blame speculation and media reports about the prospect of further rises for fuelling the regional crisis. U.N. officials and aid workers certainly believe that is part of what is driving the prices up in Thailand. Last week alone rice prices doubled within seven days.

“If people are saying that prices are going up to 1,000 US dollars per tonne you can count on it that there are people who are going to hoard, who are going to sit on their stocks and wait until this is going to happen,” Jack Keulemans, a regional procurement officer for the WFP, told reporters in Bangkok last week. “You will never make such a quick buck as to sit on that stock.”

The Thai Rice Exporters Association has projected that rice prices could top 1,000 dollars per tonne by June, up from between 600 – 700 per tonne currently. The country’s commerce minister Mingkwan Sangsuwan recently urged farmers not to sell paddy immediately, saying it could fetch a higher price in a few months. But this advice was immediately rejected by leading rice growers and exporters.

“Rice trading is facing a crisis due to the absence of supply while the prices are unbelievable, said Chookiat Ophaswongse, president of the Rice Exporters Association. “We should let the price rise according to the (free) market mechanism, but not from speculation.”

In Thailand, the world’s largest rice exporter, millers are stocking up and defaulting on contracts with exporters, according to industry experts.

“Exporters who have stocks are making a lot of money, as millers who have supply contracts are not actually delivering the rice,” said Vichai Sriprasert, president of Riceland International, a major Thai rice exporter. “I believe the losses are considerable for those who don’t have physical control of the rice.”

Farmers though do not appear to be benefiting from the rising prices, according to Prasit Boonchuey, president of the Thai Farmers’ Association, as they had to sell their grain immediately after it was harvested for lack of storage facilities.

The WFP is watching the price rise, especially in Thailand, with alarm. “I have sleepless nights,” Keulemans admitted.

“As prices go up in the world market, many millions of people across Asia will face food shortages and possible starvation,” Paul Risely, WFP’s regional spokesman, told IPS. “Every day we are battling to procure food; and everyday millions of people in Asia are in greater danger of going hungry,” he said.

WFP estimates that at present prices it would take more than another 160 million dollars to maintain current programme commitments.

“There is a potential for a significant humanitarian crisis as a result, we have already seen unrest in some places in the region where rice prices have affected people,” Risely stressed.

If the funds are not forthcoming, WFP will have to reduce the size of the rations it provides, or reduce their frequency, Risley said.

WFP is not alone in facing this pending crisis. Thousands of Burmese refugees, who have fled across the border into Thailand to escape from the military government, are now facing another danger – starvation.

“The rice price is killing us,” said Jack Dunford, head of a consortium of agencies that provide food, shelter and other aid to more than 140,000 ethnic minority refugees, along the border with Thailand. The agency has appealed to its donors for more funds, but already is seriously considering reducing the meagre rations they provide the refugees. “This is a very vulnerable group of people.’’

Risley’s sentiments mirror that of most aid workers and U.N. officials providing support for the poorest people in the region. “They are the ones who are going to suffer most if the rise prices continue to skyrocket,” he said.