rice roundup

Businessweek recently posted an article that clearly and concisely explains what’s happening with the rising cost of rice. The entire thing is a fascinating read, addressing speculation, export, biofuel production, oil prices, and the impact of all this on food aid. Here’s the excerpt most directly relevant to Thailand:

At first blush, Thailand appears to be sitting pretty. The spot price of Thai fragrant rice is about $1,100 per ton, compared with about $320 at the end of last year. However, exporters make their contracts several months in advance of delivery, and Thai Rice Exporters Assn. President Chookiat Ophaswongse says several exporters face huge losses because they are buying rice from traders at today’s prices but delivering that rice to buyers at prices from early in the year, before the latest price spiral started. Some exporters have renegotiated, others have defaulted on their deliveries. Chookiat says higher prices will cause exports to fall 20%-25% in the second quarter, to about 780,000 tons per month, compared with the first three months of the year.

That article claims that there isn’t a global rice shortage so much as rising prices due to speculation. Exporting nations stop exporting because they’re panicked, but domestic speculators horde the stuff and make the prices rise at home anyway. But the scary thing is, there’s only not a real shortage yet. We’re consuming (or perhaps hording) more rice than we’re producing which means we’re dipping into the stockpiles. Not exactly sustainable. Prime Minister Samak has been proposing a sort of Rice OPEC, a pretty controversial proposition (exporters are liking the idea, importers are hating it, economists think it won’t be entirely effective).

It’s a bit frustrating watching people write about the debate the rice crisis from a macro-economic point of view, like some kind of abstraction, because, as usual, poor people (think rice-and-fish-sauce-for-dinner poor) will suffer the most from this. From Al Jazeera:

a rise of even a few cents can for millions mean a difference between surviving or going hungry.

The more things change, the more they stay the same.

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