Dwindling rice surplus may prompt price surge
Ample supply may insulate Asia's main staple for at least two more years from price surges that have hit other grains, but costlier rice would feed food inflation worries, stirring fears of a repeat of the 2007/08 global food crisis that led to riots in some developing nations.
An estimated excess of 2 million tons of rice over the next three years is seen diving 90 per cent to 200,000 tonnes by the end of the decade, under normal weather patterns, the Food and Agriculture Organisation (FAO) says.
The UN food agency and the Organisation for Economic Cooperation and Development (OECD) see prices staying at the high levels persisting since 2007/08. Thai benchmark rice prices have jumped at least 40 per cent in the last five years.
"We foresee world rice prices remaining above the levels prevailing prior to 2006," said Concepcion Calpe, a senior FAO economist, adding higher production costs due to competition for land, water, energy, fertilizer and labor backed that forecast.
That could worsen in the next decade if top exporters Thailand and Vietnam switch more land to other uses, water and labor shortages intensify and moves to improve yields prove ineffective.
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