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| Food Price Surge Could Mean ‘7 Lost Years’ in Poverty Fight, Zoellick Says - - The crisis of surging food prices could mean “seven lost years” in the fight against worldwide poverty, World Bank President Robert B. Zoellick said. “While many are worrying about filling their gas tanks, many others around the world are struggling to fill their stomachs, and it is getting more and more difficult every day,” Zoellick said at a press briefing on the eve of the IMF-World Bank Spring Meetings on Fri, April 11, 2008. Zoellick said the poor spend as much as 75% of their income on food. “In just two months, rice prices have skyrocketed to near historical levels, rising by around 75% globally,” he said. The price of wheat has risen 120% over the past year, he added. Over the past three years, food prices overall have risen 83%, the World Bank estimates. |
Rice prices surged above the $1,000-a-tonne level for the first time on Thursday as importers scrambled for supplies in a market where producing countries from Egypt to China are placing restrictions on exports.
The jump in price was triggered by the Philippines, the largest rice importer, when it failed for the fourth time to secure as much rice as it wanted.
The Philippine rice tender on Thursday received offers for only 325,000 tonnes, a third below the government’s target. It faced an average offer at $1,046 a tonne, up 47% from March. Some of the offers hit $1,220 a tonne.
Thailand is the world's biggest rice exporter and the Thai newspaper The Nation says today that Thailand's rice exporters have been shocked by a bid from Vietnam to sell 110,000 tonnes of rice to the Philippines at the historically high price of $1,200 per tonne.
They are concerned that since the bid involves grain of only medium quality, the prices for higher-quality rice will escalate suddenly, and the international rice trading system may be seriously damaged.
Vietnam, whose rice crop was seriously damaged by poor weather last year, had all but bowed out of this year's international market. But it re-emerged to offer 110,000 tonnes of 25-per-cent white rice at $1,200 per tonne, when there are six grades of white rice above the 25-per-cent grain, to say nothing of premium grades like jasmine or basmati rice, according to the newspaper.
The UN's Food and Agriculture Organization (FAO) said last week that food riots have occurred in 10 countries in the past month and in Haiti, the Prime Minister was ousted because of the surge in the price of rice.
China's State news agency Xinhua, reports that multiple factors including climate, supply and demand, oil prices and the utilization of bioenergy have pushed up the global rice price recently, according to a senior economist at the FAO.
Fang Cheng, speaking in a recent interview with Xinhua at the Rome headquarters of the FAO, said the rising rice price has been caused by many factors.
Firstly, drought has led to cereal reduction in a number of developed countries, particularly in the wheat industries in Australia and some European countries.
Meanwhile, high oil prices have fueled the demand for bioenergy, making the United States, a large food exporter, which uses more corn to produce bioenergy. And economic growth in developing countries has improved people's living standards, but raising per capita food consumption.
From a consumption point, if the wheat price rises, people will eat more rice, which in turn pushes the demand for rice and naturally raises its price. The competition for plantation areas between different crops as well as other short term factors was also contributing to the soaring rice price, he added.
The Bangkok-based Nation says that as of April 9th, the Thai free-on-board export price for 100-per-cent white rice - one of the highest grades of white rice - had surged sharply to $854 a tonne and for jasmine rice to $1,130. Early last December, 5-per-cent white rice - one grade down from 100-per-cent white rice - was fetching $348 and jasmine rice $606.
"The maximum price of 25-per-cent white rice should not exceed $900 a tonne. However, this price [from Vietnam] will jack up prices for other kinds of rice, and rice-importing countries will step back from their demands. Thai rice exporters are already afraid of selling rice, because of the skyrocketing prices," Sompong Kiti-reanglarp, president of Ponglarp, one of four Thai traders involved in Thursday's Philippine bidding, said.
Thailand is committed to exporting over nine million tonnes of rice to the world market at an appropriate price, the Thai government reaffirmed Wednesday.
Deputy Prime Minister and Commerce Minister Mingkwan Saengsuwan said Thailand is able to export more than 9 million tonnes of rice this year,"at a reasonable price."
Last month, the United Nations Economic and Social Commission for Asia and the Pacific (ESCAP), which is based in Bangkok, said in its annual report: Chronic neglect of the agricultural sector in Asia and the Pacific is condemning 218 million people to continuing extreme poverty, and widening the gap between the region’s rich and poor.
“Governments must show greater political will to address decades of policy neglect and failure in the agricultural sector,” said Noeleen Heyzer, UN Under-Secretary-General and the Executive Secretary of ESCAP. “It is simply unacceptable that at a time when the economic growth of Asia and the Pacific has surpassed all expectations, we are not doing all that we can to improve the lives of more than 200 million people living in such poverty.”
Food accounts for a much bigger proportion of household spending in poor countries than it does in the developed world.
The US Department of Agriculture says that an average household in India spent 32% of its income on food last year compared with 6% for a household in the United States. The figure for Indonesia was 43% and 36% for the Philippines.
