Multiple factors including climate, supply and demand, oil prices and the utilization of bioenergy have pushed up the global rice price recently, said a senior economist at the Food and Agriculture Organization of the United Nations (FAO).
Fang Cheng, speaking in a recent interview with Xinhua at the headquarters of the FAO, said the rising rice price has been caused by many factors.
Firstly, drought has led to cereal reduction in a number of developed countries, particularly in the wheat industries in Australia and some European countries.
Meanwhile, high oil prices have fueled the demand for bioenergy, making the United States, a large food exporter, use more corn to produce bioenergy. And economic growth in developing countries has improved people's living standards, but raising per capita food consumption.
From the consumption point, if the wheat price rises, people will eat more rice, which in turn pushes the demand for rice and naturally raises its price. The competition for plantation areas between different crops as well as other short term factors was also contributing to the soaring rice price, he added.
The international rice market is facing price hikes because demand is higher than supply. Since January this year, the international rice price has jumped by 20 percent. In March, the price of high quality Thailand rice was 546 U.S. dollars per ton, up 13 percent from February, and 68 percent higher than March 2007,Fang said, quoting FAO's report.
The soaring rice price will make importers pay more. The import cost for low-income food-deficit countries is expected to rise sharply for a second successive year, about 56 percent or more than last year. Although the rising rice price has brought more benefits to rice exporters, it is also lifting the domestic rice price, he said.
According to FAO's report, as major rice exporters have adopted policies to limit rice exports, the international rice trade is projected to shrink this year.
Fang said that besides rising rice price, the price of wheat, corn and other crops are also on the increase.
The current food price hikes have had negative impacts on the global economy, as they have pushed up the whole market price and have increased the pressure of inflation. In some countries, food price hikes have triggered riots.
The prices of food are formed by many factors, so it is impossible to hope it can be tamed in a short period of time. However, if suitable measures have been taken, the issue can be addressed, he added.
The FAO expert praised China for its important role of keeping food prices stable on the world market.
The policies in agriculture development, like the abolition of agricultural tax and increasing subsidies to farmers, have contributed a lot to food production in China, he said.
According to the FAO report, global cereal production in 2008 is expected to rise 2.6 percent to a record 2.2 billion tons and rice production will increase 1.8 percent to about 12 million tons.
Increasing production will ease to some extent the tight food supply in some major rice producers. However, as the world's consumption mounts greatly, the cereal stockpile will still be reduced to its lowest level for 25 years in 2008.
As for the food prices trend, Fang said global food prices have their own fluctuation periodicity, but high oil prices and reduced global food stockpile add more uncertainties to the food market.
In general, food prices are in a tight situation but instead of a sudden and sharp jump, they will rise gradually and stably.
Source:Xinhua
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