The Cry over Food Crisis and Inflation

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; 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.


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