Rice climbs, World Bank issues warning on risks

Turkish Daily News
Thursday, April 24, 2008

SINGAPORE - Bloomberg

Rice jumped to a record as World Bank officials said they are concerned pressure is growing in Thailand, the world's largest exporter, to restrict shipments, worsening a global food crisis.

“If a key exporter like this limits foreign sales, it would be very much like Saudi Arabia reducing oil exports,” said James Adams, vice president of the bank's East Asia and Pacific department. China, Vietnam, India and Egypt have curbed overseas sales to safeguard domestic supplies and cool inflation.

Rice, the staple for half the world, gained as much as 2.3 percent in Chicago yesterday, more than doubling in the past year. Wheat, corn and soybeans advanced to records this year, spurring social unrest in countries including Haiti and Egypt.

“Any move by Thailand to limit exports would create panic in the global market,” Kenji Kobayashi, a grain analyst at Kanetsu Asset Management Co., said by phone from Tokyo yesterday.

The Southeast Asian country ships one-third of the world's exports, according to the U.S. Department of Agriculture.

Silent famine:

Soaring prices may put basic foods beyond the reach of the poorest people, raising the risk of a “silent famine” in Asia, a World Food Program official said April 21. The poor will struggle to afford higher costs even as supplies stay available in shops, according to Paul Risley, a spokesman for the United Nations agency that feeds 28 million Asians.

Thailand may follow its Asian neighbors in limiting sales, the World Bank's Adams said in an interview. The more countries impose export constraints, the “stronger the pressures become for Thailand to do the same,” he said April 21.

The nation won't impose curbs on overseas sales amid record prices, Prime Minister Samak Sundaravej said at a press conference Tuesday, adding there would be no measures by the government that may distort prices.

“Thailand will lose the name of kitchen of the world” should it reduce shipments, he said.
UN Secretary-General Ban Ki-Moon said April 20 rising food costs may hurt economic growth and threaten political security. The World Bank has forecast that 33 nations from Mexico to Yemen may face social unrest because of higher food and energy costs.

The price of grade-B white rice, the benchmark export variety, reached a record $854 a ton on April 9, the most recent date for which prices are available. This compares with $327.25 a ton this time last year. Thailand exports almost twice the amount of rice as India, its nearest rival.

Prices hurt sales:

Thai exporters said foreign sales are already hurt by high prices. According to Chookiat Ophaswongse, president of the Thai Rice Exporters Association, the country's rice exports may fall by one-third by the end of the year as high prices erode demand.

Rice futures in Chicago climbed to $24.745 per 100 pounds yesterday and traded at $24.510 at 11:30 a.m. Singapore time. Corn traded at $6.0525 a bushel, near its $6.23 record on April 17.

World Vision International, which provides food relief in 35 countries, said it can no longer provide rations to 1.5 million of the poor people it fed last year because of soaring costs and unmet donor aid commitments.

“Despite our best efforts, more than a million of our beneficiaries are no longer receiving food aid,” World Vision President Dean Hirsch said Tuesday. “Around 572,000 of these are children who urgently need enough healthy food to thrive.”

In Cambodia, 13-year-old Pin Oudam gets a free breakfast of rice, fish and yellow split peas every morning at his school in Kampong Speu, the poorest province. Next week he won't.

The World Food Program cut off rice deliveries to 1,344 Cambodian schools last month after prices doubled and suppliers defaulted on contracts. Schools will run out of food by May 1, depriving about 450,000 children of meals, the WFP estimates.