World Food Fears Mount as Rice Prices Hit Record
Concerns about food security mounted, as rice prices hit records in Asia and the United Nations warned that staples for the world's hungry were getting much more expensive.
In the United States, Bush Administration officials downplayed notions of food shortages amid reports of worried buyers stocking up on rice in major chain stores.
"In the U.S., I don't see food shortages," U.S. Treasury Secretary Henry Paulson told Reuters in an interview. "We have plenty of food in the U.S. The price of food has gone up, but again that won't be as significant for the average American as gasoline."
Rice prices hit record highs in Thailand and in electronic trading of Chicago Board of Trade futures during Asian trading hours. This week's 5 percent jump in Thailand rice takes prices to $1,000 a ton, nearly triple their level at the start of the year, intensifying fears of social unrest in Asia.
Rice prices on the CBOT are up about 80 percent this year, hitting a record of more than $25 per hundredweight in Asian trading hours, then retreating in Chicago on profit-taking.
Riots have erupted in Africa and Haiti due to the surging price of fuel and food. The International Monetary Fund is in talks with governments in 10 countries, mostly in Africa, about boosting aid to cover soaring food prices, a spokesman said.
"Of course this needs to be determined country by country, but as a general rule we believe that targeted social assistance is the first best policy, but that other temporary measures may be needed and could be used, such as tax on food," IMF spokesman Masood Ahmed said.
"We have also encouraged our members who are food exporters to avoid disruptions to global markets, such as through export restrictions of food and to preserve domestic production incentives," Ahmed added.
At the United Nations, the World Food Program's executive director said the cost of feeding the world's hungry has spiked nearly 40 percent amid spiraling food costs and oil prices.
Unless donor governments can plug the gap, the U.N. food agency will need to trim operations, Josette Sheeran told reporters in New York by video link from WFP headquarters in Rome.
The crisis began last year with India's imposition of export curbs to protect domestic supplies. This week, even the United States felt the reverberations, as major retailers started to notice signs of panic buying.
Sam's Club, a unit of retail giant Wal-Mart, said on Wednesday it was capping sales of rice at four bulk bags per customer per visit. The previous day, rival Costco Wholesale Corp reported mounting demand for rice and flour as worried customers stocked up.
"Everywhere you see, there is some story about food shortages and hoarding and tightness of supplies," said Neauman Coleman, an analyst and rice broker in Brinkley, Arkansas.
U.S. Agriculture Secretary Ed Schafer said there was no evidence of a lack of rice in the United States. Separately, the U.S. government reported that weekly export sales of rice tumbled 85 percent last week as prices repeatedly hit record highs, fueled by growing concerns over possible shortages.
In Bangkok, some traders said Thai 100-percent B grade white rice, the world's benchmark, could hit $1,300 a ton on demand from the number-one importer, Philippines.
Iran and Indonesia normally buy as much as 1 million tons of Thai rice annually but have bought nothing in 2008. Indonesia said it can meet domestic rice demand thanks to a bumper harvest, export curbs and subsidies for the poor.
Officials said planting had started well in Western Australia after good rains, while India said a record harvest and bulging stocks meant no imports were needed this year.
On Wednesday, Brazil suspended rice exports. While the country is a minor exporter, its decision followed in the footsteps of No. 2 rice exporter India and No. 3 Vietnam.
Thailand, which accounts for nearly a third of all rice traded globally, reiterated that it would not impose any curbs, saying it had enough stocks to meet commitments.