Not by Rice Alone, W T O Also

Sunday Discourse by Philip Fernando in LA for Asian Tribune

Fried, boiled or steamed rice is synonymous with good wholesome food and politics of rice has dominated Asia for decades. The largest rice growers in the world, China, Thailand Vietnam and Burma are getting frantic calls for rice from many countries these days.

USA is the latest region to face a sharp rise in the price of rice for fifteen million people of Asian descent living here. Increased demand from rapidly developing nations such as China, the use of crops for bio-fuels, global stocks at 25-year lows and market speculation are blamed for pushing prices of wheat, corn and rice to record highs. A rice farmer in Silicon Valley in northern California reportedly made million dollars overnight as prices spiraled. The flow of rice supplies to the needy has not been properly regulated. World Trade Organization has to look into this seriously. They are meeting in May.

The situation was acute in some parts of the world. It sparked food riots in several African countries, Indonesia and Haiti. The FAO has said 37 countries face food crises but Director General Jacques Diouf on seemed confident that solutions were available.

According to the FAO, Philippines, Indonesia, Sri Lanka and Bangladesh, with millions of poor between them, have to scrimp on already meager budgets and skip meals to ensure they can still feed their families a daily helping of the cereal. There are some signs that the dramatic international price situation may improve in the months ahead as more harvests hit markets and importers ease back on purchases.

Meanwhile in many countries prices are climbing upwards and many have little choice but to tighten their belts. The FAO has warned about impending rice crisis several times. The poorer nations are unable to stock-pile rice as resources are limited. Thus the vagaries of the price following poor harvests arise. Philippines believe that there's really no rice supply shortage, only a shortage of money to buy it.

According to consumer reports, affluent countries such as Japan, South Korea and Singapore are coping up better than others. Many people are able and willing to absorb price increases rather than cut back on their favorite staple. In Japan, some budget-conscious consumers are even turning to home-grown rice, which because of various government programs has a fairly stable price, in the face of soaring costs for imported grains such as wheat, which is pushing up the cost of bread, beer and noodles.

There is a heated debate in the US now about the usefulness of turning to bio-fuels to reduce our dependence on oil. With increased demand for oil from rapidly developing nations such as China and India, crops are being turned into bio-fuels in greater levels.

Wheat, corn and rice are now having the highest recorded prices in history. That in turn has sparked a food crisis. Director General Jacques Dioufsaid that “this is not Greek tragedy where fate is decided by the gods and humans can do nothing about it. No, we have the ability to influence our futures," he told a news conference in Paris.

"It's a good thing that international institutions are helping the poor gain access to food, but on our side we need to fight the most important battle today which is to ensure the 2008 farming season is a success."

In Tokyo, EU Trade Commissioner Peter Mandelson said the World Trade Organization should pressure food-producing countries to maintain exports. Some nations have banned exports in an attempt to avert domestic shortages. If we restrict trade, we're simply going to add food scarcity to the already large problems of food shortages that exist in different countries," Mandelson said in an interview.

"The WTO stands for free trade. It needs to exert its pressure and influence to reduce tariffs and thereby encourage trade. It's also got to stand up against export restrictions, export taxes, which too will stop the free flow of trade in foodstuffs and agricultural produce."

Prices of rice, a staple in most of Asia, have risen 68 percent since the start of 2008. Even in the US, which grows rice in large quantities, prices went up last month. In Chicago, July rough rice futures soared 2.3 percent on Wednesday to a record $24.85 per hundredweight. Some of the main rice producing countries have imposed export curbs. and this has combined with low global stocks to drive rice higher," said Kenji Kobayashi, a grains analyst at Kanetsu Asset Management in Tokyo.

In the latest sign that fears of rice shortage are rippling around the world. Wal-Mart Stores Inc’s and Sam’s Club warehouse have limited sales of several types of rice. On Tuesday, Costco Wholesale Corp, the largest U.S. warehouse club operator, said it has seen increased demand for rice and flour as worried customers stock up. Already one of the poorest countries in the world, Afghanistan has been struggling to cope with higher prices.

President Hamid Karzai's government has allocated $50 million to buy food from neighbors, a spokesman said. But many Afghans were unmoved and blamed the government. "What should we eat? How can a poor man afford to buy food?" asked Kamaluddin Khan, out shopping in Kabul on Wednesday. "Mr. Karzai sits in his palace and doesn't know what is going on."

Trade bans on rice have been imposed by India, the world's second-largest exporter in 2007, and Vietnam, the third-biggest, in hopes of cooling domestic prices. In Thailand, the world's largest rice exporter, farmers have planted a rare third crop and are expected to reap another 1.6 million tons of rice paddy this year.

This situation needs immediate action. We have ignored warning given by the FAO. According Diouf “the situation we are in is the result of inappropriate policies over the past 20 years. Between 1990 and 2000 we lowered food aid for agriculture by half." Generous farm subsidies in wealthy countries had also discouraged agriculture in the developing world, he said. "We have lacked two things: the political will and resources. I hope that this current crisis will give us the political will and the resources to do things."

Mandelson said concerns over food and global financial turmoil were spurring progress in the Doha round of WTO talks to liberalize world trade. The next ministerial meeting on the Doha round may be held in late May or June. Something concrete must happen there. Or else the crisis would get out of hand.

- Asian Tribune -