Rice, which is the staple food for half the world, saw its futures contracts rise just about 3% to $21.60 per 100 pounds on the Chicago Commodities Exchange today, sparking Philippine President Gloria Macapagal-Arroyo to announce a crack down on rice hoarding. "Stealing rice from the people" will now carry a jail sentence.
Her announcement comes as soaring rice prices across Asia are spawning the rise of “rice rustlers” even as people who own and cultivate rice paddy plots are smiling at their own good fortune.
It is anticipated that Vietnam will offer to sell a large quantity of white rice to the Philippines next week at a record price of over $900 US per ton.
“I’ve never heard of it happening before, that people have stolen rice. But it’s happening now because rice is so expensive,” says 68-year-old Lung Choop, a rice farm smallholder in Thailand.
Rice is the staple food in the Philippines, in the same way that corn, wheat, and potatoes are in the United States. The island federation has to import about 15% of its rice.
Rice on the world market is now twice the price as it was one year ago. Thai rice is the world benchmark.
It is anticipated that Vietnam will offer to sell a large quantity of 25% white rice to the Philippines next week at a record price of over $900 US per metric ton after Arroyo asked that nation to guarantee the Philippines at least 1.5 million metric tons in rice exports to her nation of 91 million people. Rice exporting nations all across Asia—including major exporters China, India, Pakistan, Egypt, and yes, Vietnam, have been temporarily banning rice exports for fear of running into their own food shortages.
The long grained, aromatic Jasmine Rice is currently the world’s most expensive rice. Second is 100% white rice.
Both of these varieties of rice carry more nutritional value than 25% white rice. At the time of this writing, Jasmine rice is quoted at $1130 US per metric ton.
“Soaring food prices have become a serious threat for the survival of the present caretaker government. There could now be serious discontent, violence, and food riots,” says Ataur Rahman,a political scientist in Bangladesh.
Global rice stocks are at their lowest since 1983-1984, yet demand is up by an enormous amount since that time. Flooding in many parts of Asia and the United States and a severe drought in Australia have contributed to a situation where some analysts are predicting global demand to be greater than global production for 2007-2008.
"People in Asia simply will not substitute. This is the situation for the months ahead until the market finds it supplies", says Abdolreza Abbassian, secretary of the Intergovernmental Group for Grains, FAO.
Yet, despite the Asian hysteria and the blaming of everything from hedge funds to biofuels land diversion, economists say there is little reason to panic.
"We’ve seen prices far higher than this. If you look back after World War II, 1947-1949, prices were significantly higher than now. We saw this again in 1972-74, when Russia bought U.S. stockpiles. As far as the bull market is concerned, prices are certainly high at the moment, but in inflation-adjusted terms, it’s very, very cheap compared to those all time highs," says Peter McGuire, managing director of Commodity Warrants Australia.