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Global rice crisis hits home
By Lucy-Claire
Saunders
For the first time in history, the international price of rice has doubled within a year, creating panic as some Asian countries hoard stockpiles of the staple and limit trade with countries dependent on rice imports, like Canada.
“This is the worst we’ve seen in the history of rice sales in Canada,” said John Chiang, the general manager for Vancouver-based Western Rice Mills Limited, a rice distributor for western Canada. “It’s anyone’s guess what will happen but it seems very likely that prices are going to keep going up. There’s no end in sight.”
Like the proverbial canary in the coal mine, the short supply of rice is the first sign of larger food related global problems, experts caution.
World food prices have been increasing rapidly since 2006, and the rate of increase during 2007 was alarmingly higher than average. Overall food prices have increased by 75 per cent since 2000, according to the United Nation’s Food and Agriculture Organization.
Rice for May delivery rose 30 cents to $20.50 per 100 pounds on the Chicago Board of Trade, as global rice exports are expected to drop at least 3.5 per cent this year.
Local retail stores have been feeling the crunch for the last year but it’s been in the last few months that prices have really jumped.
“Since January, we have experienced a 30 per cent increase in price for Thai rice,” said Herman Poon, spokesperson for popular Asian food store, T&T supermarkets.
Countries like Canada, which only import rice, are dependent on the global food chain and world market prices. In January alone, Canada imported nearly $20 million of rice from around the world, with India, Thailand and the U.S. as the country’s biggest suppliers, according to the International Trade Division at Statistics Canada.
“World supply is not enough to supply world demand and so prices have gone up to reflect shortages,” said trader Chiang. “In two months time, the price for certain varieties of rice, particularly from Thailand, will have doubled.”
Thailand, the biggest exporter of rice, is going to export 30 per cent less rice this year, driving up prices in Canada. India, Indonesia and Vietnam will also curb exports. However, governments in India and Thailand are promising to take the strongest possible measures against hoarding.
There are several reasons why global food prices are likely to continue to increase in the near future. Rising standards of living in countries like China and India are increasing the demand for products like rice, said World Bank’s chief economist for South Asia, Shanta Devarajan.
But the use of food crops for bio-fuels and animal feeds, and increased oil and fertilizer pricers, could also be straining demand.
“As the reward for farmers producing corn for ethanol goes up, they are shifting production away from other products, like rice,” said professor of Asia-Pacific trade policy at the University of British Columbia, Barbara Spencer.
“This certainly will affect the price of our food and because in Canada, we don’t produce rice, we are at the mercy of global prices.”
So far, the bill has not been passed on to customers but it’s only a matter of time before stockpiles run out and stores like T & T markets will have to sell rice at the new global market rate.
“As soon as the buffer depletes, the price will reflect the higher global prices,” Poon said from T&T’s headquarters in east Richmond, adding T&T has about a three-week buffer.
“We do anticipate increases in price for isolated rice products to come within the month,” he added.
The volatile market shows no sign of stabilizing, said Chiang, and it’s likely to remain that way until the next crop of rice is cultivated in October.
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