Dear Editor,
Guyanese rice producers can expect increased rice prices as global rice output and reserves have hit all-time lows since 1983 – 1984.
Despite a record harvest of 421 million tonnes for marketing year 2007- 2008, “the world’s rice basket has never been so empty in 25 years,” reported the Economic Times of India.
The reason given for this is that the world has consumed a record 424 million tonnes for this year and with demand continuing to outpace supply, rice reserve stocks have dropped to a new low of around 74.1 million tonnes, enough to feed the world for only two months. This reserve represents 4% below the levels a year earlier and the smallest since 1983-1984.
According to the Economic Times report, there is a “growing hunger for rice in China, India, Bangladesh and Indonesia,” four of the world’s most populous countries.” Rice remains the most important foodgrain in the diets of these countries and with Indian rice supplies “tight” ordinary rice has become more expensive than wheat, onions, potatoes and sugar.
For consumers around the world, plummeting stocks is plain bad news because when extra rice is available, it acts as a cap and keeps prices steady, according to the report.
India, one of the world’s largest rice producers, has seen domestic prices shoot up close to 15% over last year’s as impoverished families bought 2 million tonnes per month leaving little chance to increase rice stocks.
India’s government rice stocks on October 1 this year fell to 5.5 million tonnes compared to 6 million tonnes exactly one year earlier.
Globally, the rice trade pipeline is drying-up and Thailand’s milled rice prices, a benchmark for global trading prices, “are up more than 16% from a year earlier and 8% higher than in August,” the Economic Times reported.
For paddy farmers, it has led to a bonanza and in the US farmers have got the highest price for their crop in 25 years. US rice prices are presently the highest since early 1994. However, US farmers enjoy a subsidy of around US$300 per tonne but Brazil and Canada have gone to the World Trade Organisation (WTO) to test the legality of US farm subsidies.
The rapid depletion of the Chinese rice stocks is advanced as the main reason for the decline in global ending stocks.
According to a recent Dow Jones News Wire report, “Thailand’s rice export prices are expected to rise to US$375- US$410 per metric tonne, free-on-board Bangkok, in 2008.”
The harsh reality of all of this is that in those Asian countries and even the US, there is very little arable land available to increase rice production to meet consuming demands. In cases where such lands are available, the focus is on the production of food crops for bio-fuels. Also, those areas are prone to floodings, droughts and other natural disasters. Only recently, Bangladesh’s rice crop was devastated by floodings due to prolonged and unusual monsoon rains.
The Amazonian region and the Guianas Shield hold huge reserves of arable land for food crop production such as rice in huge quantities. The problem is one of developing the necessary infrastructure to facilitate crop production.
These two regions are, evidently, the last frontier where food crops can be produced in massive quantities.
Guyanese rice farmers are also benefiting from the spike in global rice prices and for the current crop paddy and rice prices have moved by around 15%.
The world stage is set for further increases in rice prices and our farmers and other operators in the industry stand to benefit tremendously.
However, having suffered from several years of hardship mainly through depressed prices and high input costs, there are still some lingering negatives affecting our rice industry and these must be addressed for the industry to move forward.
Uscrupulous providers of inputs and services for the rice industry have been trying to capitalize on increased rice prices by providing their inputs and services at unreasonably and unjustifiably high prices.
Added to this is the extremely high cost of money at commercial banks’ lending rates on loans for the agricultural sector.
The government must seriously look at the re-establishment of an agricultural lending institution such as the Gaibank of yesteryear.
Added to all of this is the fact that our industry must guard against unscrupulous rice buyers who would want to do business here as rice supplies dry-up elsewhere.
Yours faithfully,
Mahadeo Panchu