Grain Prices Soar Globally - White Rice Up 50% Since January, Potential For 40% More By End Of April

[hatrack]

Rice farmers here are staying awake in shifts at night to guard their fields from thieves. In Peru, shortages of wheat flour are prompting the military to make bread with potato flour, a native crop. In Egypt, Cameroon, and Burkina Faso food riots have broken out in the past week. Around the world, governments and aid groups are grappling with the escalating cost of basic grains. In December, 37 countries faced a food crisis, reports the UN Food and Agricultural Organization (FAO), and 20 nations had imposed some form of food-price controls.

In Asia, where rice is on every plate, prices are shooting up almost daily. Premium Thai fragrant rice now costs $900 per ton, a nearly 30 percent rise from a month ago. Exporters say the price could eclipse $1,000 per ton by June. Similarly, prices of white rice have climbed about 50 percent since January to $600 per ton and are projected to jump another 40 percent to $800 per ton in April.

The skyrocketing prices have prompted millers to default on rice supply contracts and bandits to steal rice as they aim to hoard the crop, and sell it later, as prices continue to rise. “The farmers are afraid as their fields have been robbed in the nighttime,” says Sarayouth Phumithon, an official at the Thai government’s Bureau of Rice Strategy and Supply. “This is just the beginning. The problem will get worse if the price keeps increasing.”

The reported thefts in five rice-growing provinces in central Thailand are the first signs of criminal activity in this region stemming from the sharpest global spike in commodity prices since the oil crisis in the mid-1970s. Across the world, higher food prices are triggering thefts and violence – both by people who can’t afford to eat and those who want to make an easy buck.

EDIT

http://www.csmonitor.com/2008/0327/p01s02-woap.html

[marmar]

1. I don't buy bread very often because I'm single and even a half-loaf will go to waste....

..... But I did notice on my last trip to the grocery store that a loaf of bread seemed to be a hell of a lot more expensive than when I last bought one.

[hatrack]

2. Oh, it is. If you want anything decent in whole-grain or whole wheat, it's $3.00 or $3.50

I've started baking, because I'm just not going to pay those kinds of prices - tastes better, too!

[calico1]

3. I think I will drag my bread machine down from the attic.

Flour has gone up too but at least if you bake your own you still save a lot. The prices at the store for any good whole grain bread are outrageous. I work near a Pepperidge Farms outlet store. I like their new breakfast breads but they are $3.99 in the store! At the outlet they are half price and once in a while $1. It is the only place I will get it.

[WhiteTara]

19. Try $4.59 a loaf!

I just got back from the grocery store. Yikes!

[Hannah Bell]

4. 2007 = record harvest.

any cognitive dissonance out there?

[hatrack]

5. Sure, record harvests of flint & dent corn for ethanol & cattle feed . . .

Shame about all that non-planted wheat, but hey, when the Invisible Hand is on the plow, what can we do but react?

[Hannah Bell]

7. The op headlines rice. 2007 was a record.

What is the supply/demand basis of a 50% hike in 3 months?

Speculation.

[jpak]

6. from the OP

<snip>

Last year, the Food and Agriculture Organization’s food price index increased an unprecedented 40 percent from 2006, and this year it is projected to continue rising. Surging oil prices (in turn, boosting fertilizer and transport costs) combined with a drop in production due to droughts in Australia and the Ukraine have helped to drain global food stocks.

While rice production is rising, consumption is growing faster. The US Department of Agriculture forecast rice stocks to fall to their lowest level since the mid-1970s, and wheat stocks are projected to hit their lowest point since 1946, the year after World War II ended.

These factors, combined with a falling US dollar, steadily rising demand from developing countries, and biofuel policies that mop up excess cereal production, have all helped boost world prices.

<snip>

Analysts note that the current shortage isn’t hitting as many people as hard as past shortages. As incomes rise worldwide, food is a smaller portion of the family budget. “Governments have tried to protect domestic prices from fluctuations in international prices, and they have succeeded in the past,” says Sumiter Broca, a policy analyst at the FAO. “The key point is that the proportion of income spent on food is much lower than it used to be, so that provides a cushion. The situation is not as serious as it was in 1974.”

<more>

[Hannah Bell]

9. 2007 was a record rice harvest.

Where is the supply/demand push for a 90% price hike in 4 months?

supply was'nt cut in half. did demand double? why?

[GliderGuider]

14. Rice is a global staple

Because rice is the staple commodity consumed by half the world's population, its price will be extraordinarily sensitive to supply instabilities. People absolutely need it, and they can't substitute for it in the short term, so if they have the money available will pay what they have to to get it. That means that a small imbalance in supply and demand can cause non-linear price responses.

No speculation whatsoever is required to cause what we're seeing. All you need is competing buyers for an essential, non-substitutable product, a limited supply, and sellers who respond to the market by accepting the highest offered price.

[GliderGuider]

8. 5 countries have sharply reduced or even stopped exporting rice

China, Vietnam, India, Egypt and Cambodia have all restricted rice exports. These 5 nations are responsible for almost half of all global rice exports...

[Hannah Bell]

10. They've restricted them - not stopped them.

The restrictions are to stabilize the price of rice in-country, so that producers can't sell off all their crop for the current high prices, shorting the home market.

It's the same rice they'd be eating anyway.

They're still selling rice. They couldn't begin to consume their entire crop. Thailand produces 20%+ of world supply. Do you think they can eat it all themselves?

And if a tiny country like Thailand can produce enough to feed 1/5 of the world, where is this "food crisis" coming from?

Prices aren't being driven by exceptional demand, despite the hype & doom-laden prognoses.

Prices are being driven by speculation & capital manipulation.

[Hannah Bell]

11. Unfortunately, the money games

cause real deaths.

[GliderGuider]

12. You'll notice that Thailand isn't on that list.

Can you present some evidence to support your contention that global food price inflation is being driven by speculation? People say the same thing about oil prices, and of course they're flat-out wrong. I'd need more evidence than just your assertion to believe that the global grain markets are being manipulated by shady speculators. I've seen no evidence of it myself. The precipitous decline of the world's grain reserves argues pretty strongly in favour of the price rise being driven by fundamentals - i.e. a supply/demand imbalance.

[Hannah Bell]

13. according to usda, the largest rice exporters are:

in order:

thailand
vietnam
(together ~1/2 of world exports)

india (16%)

us (12%)

pakistan (10%)

(so 5 countries export ~88% of world supply: 3 with small landmass, 2
with large landmass)

s. america

"other"

china (not a big exporter)

http://www.aragriculture.org/agfoodpolicy/radio/february2007/024_02202007_audio.htm

egypt doesn/t make the list

edited on # of countries/size - my carelessness

[Hannah Bell]

16. if you haven't been following ag for a while...

you don't know why stockpiles are down.

They're down, in many cases, because gov'ts stopped supporting them, or deliberately drew them down, under local & international financial pressure , to facilitate "the magic of the free market".

The market doesn't like well-run gov't stockpiles, because they stabilize prices, keep the poor from starving altogether, small farmers from going out of business, & ag land from turning into pavement.

The "market" much prefers artificial scarcity because it commands higher prices. Not for the farmers, usually, but for the middlemen & financiers. It also facilitates consolidation, which is why a few companies like adm now control the majority of the world's grain trade.

Stockpiles are down, also, because land has been taken out of production:

"Worldwide, grain area expanded from 5.9 million km2 (1457 million acres) in 1950 to its historical peak of 7.30 million km2 in 1981. By 2004, it had fallen to 6.70 million km2."

"Global per-capita grain production has declined slightly since 1985, but it is not because our capacity to produce the grain has declined. Per-capita declines in world cereal production have been overwhelmingly due to reductions in the amount of cereal cropland under production, particularly in the US and Canada - both very large net exporters of grain. The world market is flooded with grain, and prices are now so low that it simply does not pay to grow any more of the stuff - at least not in the US, Canada or in some parts of Latin America (such as Argentina)."

http://home.alltel.net/bsundquist1/se9.html

The US has become a net importer of food; does that make sense to you? The "breadbasket of the world," with a large temperate landmass & low population density?



Some evidence of deliberate de-stockpiling:

http://archive.japantoday.com/jp/news/64431

(the article is gone, but the headline & comments remain. Here's one from 97:

"Government is working to reduce rice stockpiles from the current 3.7 million tons to an appropriate level of 2.0 million tons over the next three years. These measures include cutting the procurement price and reducing the amount of rice the Government will buy, donating surplus rice as food aid, and taking roughly 170,000 hectares of rice paddies out of production next year."

http://www.fas.usda.gov/WAP/circular/1997/97-12/wap2.htm

Japan was self-sufficient in rice until quite recently. Its decreased supports for production are mostly the result of international (mainly us) pressure. If a little country like japan - the size of cali, with as many people as the us, can be self-sufficient in rice, do you really think the whole world can't be?


Here are two more articles that have gone down the memory hole & apparently exist only as headlines now:

Reuters: "Vietnam to end rice stockpile scheme early"
Reuters: "Early end to Vietnamese rice plan will ease financing"

http://www.riceonline.com/AugNews.htm


More recent:

http://www.angiangtourimex.com.vn/en/newsdetail.asp?id=288&cat1id=7

Indonesia VP: Rice Imports Will Not Be Funded From Budget (2006)

http://www.kabar-irian.com/pipermail/kabar-indonesia/2006-September/010761.html

JAKARTA, September 8 (Dow Jones)--Imports of rice to top up depleted
stocks in Indonesia will not be funded from the state budget, Vice
President Jusuf Kalla said Friday.

"(Import funding) will be handled in a standard commercial way," Kalla
told reporters.

"The state budget will be used only if stocks are (completely)
finished," he added. < 08-09-06 0616GMT >

COMMERCE MINISTRY
Bidding due on big rice stockpile

Published on Aug 30, 2007

Embattled exporter President Agri Trading faces a government petition

To reduce the burden of the government's huge rice stockpiles, the Commerce Ministry will open bidding on 878,000 tonnes of white rice next week.

Of the total, 556,000 tonnes comes from cash-strapped rice exporter President Agri Trading and 312,000 tonnes from the government's stockpiles.

Pisut Chalakornkul, president of the Public Warehouses Organisation, said the government would soon file a petition to President Agri Trading calling for compensation through rice selling if the government received a lower selling price from new bidders.


The biggest de-stockpiler was India. There was a big domestic controversy about it at the time. i haven't been able to find the links i wanted, but i will.


for the moment, you might consider why you believe the world suddenly can't feed its people - who's feeding you that.

you might also check into the degree of concentration in the world grain market, & the recent boom in commodities futures.

also, why you so easily swallow an article that tells you egypt & cambodia are among the world's largest rice exporters, but doesn't put thailand or the us on the list? The US has long been one of the biggest rice exporters in the world. thailand & vietnam are newcomers, & i think you'll find a lot of US capital involved. egypt, so far as i'm aware, has never been a major exporter.

[Hannah Bell]

17. Here's some of the info on India...

http://209.85.173.104/search?q=cache:FrzT-qRMpWQJ:www.infochangeindia.org/agenda6_11.jsp+%22world+grAin+trAde%22+oligopoly&hl=en&ct=clnk&cd=7&gl=us


Though it's a little hard to follow unless you know a bit about Indian politics & int'l ag policy. Still, you can get the general idea - a continuing attack on Indian food self-sufficiency led by int'l traders & abetted by local interests.

Indian grain stockpiles were among the world's largest; they turned India into a food-exporter. The article says they needed to import wheat for the first time in years in 2006.

[Hannah Bell]

20. from fao:

28/02/08 – International Grains Council

GRAIN MARKET REPORT SUMMARY

Grain and oilseed prices scaled new peaks in another turbulent month, with erratic, and often BAFFLING, developments in US wheat FUTURES a particular focus. While there was NO FUNDAMENTAL CHANGE IN THE SUPPLY OUTLOOK, markets remained extremely volatile.

The UNPRECEDENTED PRICE SWINGS COINCIDED WITH RECORD OIL & GOLD AND INCREASED FUND ACTIVITY IN...KEY GRAIN & OILSEED FUTURES EXCHANGES...

Tight nearby supplies of premium quality North American spring wheat, combined with EXTRAORDINARY INVESTMENT FUND ACTIVITY, lifted Minneapolis wheat futures to their highest level ever, with daily trading LIMITS for the nearby contract eventually REMOVED IN ALL three US FUTURES EXCHANGES.

While the OUTLOOK FOR NEXT WHEAT CROP remained broadly FAVORABLE, this did not greatly dent the market’s bullish sentiment. Maize (corn) export prices also moved higher in February, partly led by wheat and continuing evidence of heavy feed and industrial demand, but there was little change in the fundamental outlook. A higher than anticipated US planting forecast and the reopening of Argentina’s export registry exerted only a mildly bearish influence....

http://www.fao.org/es/esc/common/ecg/55/en/mnr0208.pdf

if you read between the lines, it says SPECULATION.

[fed-up]

15. Calif rice farmers may plant less rice (water shortage)-they are still tilling the fields

Until the fields are tilled and the weather forecasts in, we won't know how many acres are planted for 2008.
http://www.centralvalleybusinesstimes.com/stories/001/?ID=8225

Central Valley farmers crank up the pumps
ORLAND
March 25, 2008 10:07am

Water tables are dropping in the Sacramento Valley portion of the Great Central Valley as farmers respond to cutbacks in supplies from federal reservoirs.

Agricultural contractors in the Central Valley Project have seen allotments cut with the giant pumps turned down under court order to protect an endangered fish, the Delta smelt.

But another reason is more elemental: There isn’t as much water in storage, such as the state’s Lake Shasta.

“Lake Shasta is still way down. As of a week and a half ago it was only 61 percent of normal,” says Mike Vereschagin, an almond and dried plum farmer and president of the Glenn County Farm Bureau.

..

Reduced water allocations will be one factor affecting California rice acreage, the California Rice Commission says.
Rice farmers have started preparing fields for this year's crop, with planting expected to start in mid-April and continue into May.
The Rice Commission says it may see some acreage reduction, despite strong prices for rice. It cites high prices for other grains and reduced water supplies as the main factors in the possible acreage cuts.

http://www.calrice.org/a7_how_rice_grows.htm

Nowhere in the world is rice production more advanced than in California. Careful attention to every step in the cropping cycle and milling ensures that rice produced in our warm Mediterranean climate meets—and often exceeds—customers’ expectations for great rice.

In March, farmers begin to prepare their fields for planting. First, fields are carefully leveled with precision, laser-guided grading equipment. Flat fields allow rice farmers to conserve water. Fertilizer is then added, and shallow furrows are rolled into the field. By April, the fields are ready to be planted.

[WhiteTara]

18. I'm putting in a garden. I recently drove the Central

Valley and there is no food being planted. From one end to the other (about 200 miles) it is ALL almond trees!
:scared:

[Hannah Bell]

21. almonds aren't food?

if they've switched from vegetables, it might be because they're going to crops that command higher prices. 1/3 of vegetables in the us are now imported. domestic producers are competing with cheaper foreign producers.

the us is (since 2004) a net food importer.

the "breadbasket to the world" is an importer. funny, huh?

is this because we're "running out" of space to grow food, or people who want to grow it?

no, it's because of consolidation in the world food system, under the domination of a few global players - & the dominance of finance over human needs.