Credit crunch may lead to another rice crisis
A drop in oil and fertilizer costs has halved the price of rice – a staple (grundnæringsmiddel) for almost 700 million of Asias poorest – but it could jump again this year as farmers struggle to secure loans amid the credit crunch, experts said Friday.
The price of the regional benchmark, Thai 100 percent Grade B rice, fell to 575 US dollar per ton last October from a record high 1.080 dollar per ton in April – a result of record production and declining oil and fertilizer costs.
Farmers, however, suffered losses because they were left with a lower-priced crop produced with high-priced fuel and fertilizer, said the Philippines-based International Rice Research Institute (IRRI).
Rice prices are likely to rise sharply for the second straight year in 2009 as the global economic slowdown hits farmers and consumers alike, the Research Institute warned.
The worldwide credit crunch will make it hard for farmers to secure cash to purchase essentials such as seeds and fertiliser, the Philippines-based body said in the latest edition of its quarterly journal “Rice Today”.
At the same time, it added, the economic downturn may increase demand for rice in developing nations as falling income forces poor people to switch back to less expensive staples.
In five of the past seven years, rice consumption has exceeded production, resulting in frequent dipping into the worlds buffer stocks to cover the shortfall, according to Samarendu Mohanty, an IRRI expert.
“The recent rise and fall in rice prices reaffirms the high degree of price volatility arising out of historic low levels of global rice stocks,” Mohanty said in IRRIs quarterly report.
The neglect of agricultural research and infrastructure development since the early 1980s has started to bite, Mohanty said. The recent crisis turned the worlds attention back to agriculture, but the credit crunch is likely to further tighten funding for infrastructure improvements and research and development activities, he said.
Kilde: www.worldbank.org
