The Cry over Food Crisis and Inflation 3


Recently, India and US governments have indulged in bad verbal spat over food shortage. There is no denying the fact that the population of countries like India, Pakistan and China is growing at such an alarming rate; and with growing wealth and economies, the consumption has increased but the consumption has increased all over the world; thus, resulting in the increase in the consumption of the food on the domestic front; though all of them are self-sufficient in themselves. I happened to read an article today at Rediff.com; which in my opinion are true to a great extent with figures mentioned therein. The solution to the problem is to curb the population growth rather than blaming each other. We should always remember, to be better we need to look at the good examples and try to excel them rather than blaming on the attitude of some bad examples (like what our Sourav Ganguly did by blaming the past attitude of Shane Warne). I don’t understand being an Indian, why we tend to not to accept our own mistakes and try to make others see how the other guy did the same way. There will be always good and bad but we have to decide which one we have to take in order to progress.

Anyways, here is the article:

Real facts behind food crisis

Biofuel is blamed nowadays for the ever-increasing food shortages with increased production of biofuels like ethanol and biodiesel drives rice prices at $1,000 per metric ton compared to $200-300 per metric ton for most of this decade.

The situation is compounded by some rice exporters withdrawing supplies from the market and the general rise in all commodity prices.

A closer look at the numbers shows a global industry at the beginning of a transition that will have major impacts on production, consumption and trade.

According to USDA estimates, the US accounted for an average of 11.5 per cent of world exports of rice for calendar years 2004 through 2007 and is projected at 12.7 per cent for 2008. US exports will increase to 3.5 million metric tons while world total exports decline to 27.5 MMT.

The largest rice exporter is Thailand at 9.0 MMT for 2007/08, 32.7 per cent of world exports, down 0.5 MMT from 2006/07 and up from 7.3 MMT in 2004/05 and 2005/06.

Thailand’s peak export year was 10.1 MMT in 2003/04. Rice production in Thailand was a record 18.5 MMT in 2007/08 and consumption is expected to be flat at 9.6 MMT. Thailand continues to monitor export sales.

Vietnam is the second largest rice exporter at 4.0 MMT, 14.6 per cent of the world total, and down from 4.5 MMT in 2006/07, 4.7 MMT in 2005/06 and 5.2 MMT in 2004/05, the peak of a 15 year export spurt that began at 1.0 MMT in 1990/91 and coincided with an almost doubling of rice production.

Domestic consumption in 2007/08 is expected to increase by 1.0 MMT to 19.7 MMT. Vietnam has imposed export restrictions.

US rice acreage in 2008 is expected to be 2.77 million acres, up slightly from 2.76 million acres in 2007, but small in comparison to US acreage for corn at 86.0 million, soybeans at 74.8 million and wheat at 63.8 million.

US rice plantings were 3.38 million acres as recently as 2005, and the decline in acreage in 2006 preceded the price increases for corn that began in the fall of 2006. These changes in US rice acreage and exports are not sufficient to drive fundamental changes in world markets.

China has a major role in rice production and use and a minor, and changing, role in rice trade. In the 2007-08 marketing year China accounted for 19.2 per cent of world rice plantings and produced 129.5 MMT of rice, 30.4 per cent of world production of 425.3 MMT.

Chinese consumption is expected to be 127.0 MMT, 29.9 per cent of world use of 424.2 MMT.

In recent years China has imported about 0.5 MMT of rice per year while exporting about 1 MMT, down from 3 MMT per year as recently as the late 1990s. China has increased export taxes to stop new export sales.

The fourth largest rice exporter is India at 3.0 MMT, 10.9 per cent of the world total, and down from 5.0 MMT in 2006/07, 4.5 MMT in 2005/06 and 4.7 MMT in 2004/05.

India exported 6.3 MMT in 2001/02. India’s production of 94.0 MMT in 2007/08 is record large and the third good crop in a row. Domestic consumption is also at a record of 90.4 MMT and up from 80.7 MMT in 2004/05.

The Indian government is battling consumer price increases that are averaging 7 per cent per year and has announced export restrictions on rice.

Pakistan is expected to be the fifth largest exporter in 2007/08 at 2.9 MMT, 10.6 per cent of world exports, up from 2.4 MMT in 2006/07, but down from 3.6 MMT in 2005/06 and 3.0 MMT in 2004/05. Before that, exports averaged about 2.0 MMT per year.

Production for 2007/08 was 5.4 MMT, up from 5.2 MMT in 2006/07 and just off the record production of 5.5 MMT in 2005/06. Domestic rice consumption is stable and stocks are adequate.

Compared to other major crops, only 6.5 per cent of rice is traded in global markets. That compares to 17.9 per cent for wheat, flour and products, 12.4 per cent for corn and 34.2 per cent for soybeans.

If China and India are removed, rice trade of the remaining countries is 11.6 per cent of production. China and India produced 223.5 MMT of rice, 52.6 per cent of world production, and have 4-6 MMT of exports, 1.8-2.7 per cent of their combined production and 14.7-21.8 per cent of world trade.

China and India are also expected to have 49.7 MMT of carryover stocks at the end of the current marketing year, 64.4 per cent of the world total. The other major exporters will have total end of year stocks of only 4.7 MMT.

With large populations, strong economic growth and internal food price pressures, China and India could quickly disappear from the rice export market. Thailand, Vietnam and the US are more committed to export markets.

Some importers are already talking about creating incentives for more domestic production. The Philippines, the largest importer at 1.9 MMT, has plans to encourage output. Indonesia has a record crop and is limiting exports to keep the supply available to avoid imports.

Courtesy: Rediff.com


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3 thoughts on “The Cry over Food Crisis and Inflation

  • spooky

    From your statistics and argument, it resembles that what bush said is correct. But why don’t you think beyond the simple facts and figures in to a wide vision and facts related thinking.

    Let me join you on discussing the world crisis in details , and with your expertize in figures may help this thinking to get a perfect view ; it may be either positive or -ve

    Some more deep analysis on the world crisis ( food, inflation etc) made me to write down some more interesting facts. In fact it lead me to think on the hidden agenda of the superpower.

    Does the international community have any idea on how much food grains going as Oil in US? Its almost 16-23% which is going in to this front, BUSH administration want to redirect media and its citizens attention from this and hide the fact that, it is responsible for the global food crisis.

    I would like to reiterate my thinking on the whole world crisis.

    As per the economic projections, the power of world is diverting from west to east. The so-called super power of the century has studied the implications and it wanted to retain the position of a super power in the coming century (at least one of the superpowers). The polices of the bush administration is mainly focusing on this front and its think tanks wanted an overall slowdown of the whole world economy to further implement its plans to retain super power status. It is a well-planned and properly executed plan to which the world had never had a vision.

    The world is booming and the economies of other countries are growing rapidly where the US economy is going in to recession. To retain the $ supremacy and super power status, the only option left is to slowdown the economies at any cost. For this century, the oil is the spine of power and blood to the booming economy. If they want control over the oil which is the blood of the whole world they need to get power to control the heart (Middle East nations who produces the most of the oil ie, Saudi, Afghan, Iran, Iraq, Kuwait, etc).

    The rest is fact:

    Iraq war
    Afghan War
    Iran War – which may happen
    Restricting Iran – India – Pak – pipeline of gas. China may come in to join.
    Control over Saudi, Kuwait

    The theory is very simple: Take control of the oil production, Use the other methods to reduce the oil import.

    By doing so, the impact around the globe is very high. If oil prices go up, cost of all products will go high including every thing from top to bottom. This will increase the inflation among all countries, ultimately it will reduce speed of economic growth overall world where the big bro can capitalize and try to improve its own economy and maintain the super power status.

    How the oil price increases effect less for US: the food grain production is very high mainly wheat, if they divert the production to bio fuel, which is going on now, can control the import of the oil/ they can use it for a different way to improve the growth.

    To divert the world from the cunning plan of crisis is to blame India or China. Thats what is happening for long and will continue till the world recognize this.
    http://world-eye-view.blogspot.com/

    This is my thinking, might be wrong, but would like to get the opinion from experts like you and lets make it more clear.

  • deepakpanigrahy

    Hi Spooky,
    I agree by your facts and opinion. But let me clear out my points in general that I wanted to put forth here:

    1. STOP BLAME GAME and try to find a solution to the problem.
    2. We should accept graciously that we are soon going to be the most populated country of the world, but do we have enough of land to produce those number of required wheat and rice and food commodities with India also planning to bring the land equivalent to the the states of Kerela and Goa under the bio-fuels by 2015 (though no idea from where so many land will be coming). In comparison to that, US is less than our middle class and almost 8 times larger than us. You decide who should be able to do what. Its like someone owning 2-BHK apartment is more free to invite a friend to stay with him rather than one owning 1-BHK.