National Hoarding in Price Rise of 2007

Vietnam, India, China Slap Ban

The major producers of Asia put restrictions on rice exports as prices reached record in April 2008 to bolster domestic supplies, meet the demand in their countries and thus contain inflationary rise in food prices. Vietnam, India, China and Egypt restricted rice exports to combatinflation and ensure food security, leaving import dependent economies in danger of food crisis.

National Hoarding

Rice-export bans, described as “national hoarding”, curbed supplies to the global market, triggering increased competition among importers to secure shipments. In Singapore, where almost 100 percent of foodstuff is imported, the government has allowed private importers to increase buffer stocks. Philippines, the world’s largest importer of rice, has been trying to secure shipments from producers such as China and Pakistan. Nigeria is looking to buy 250,000 tonnes and Iran 600,000 tonnes from Thailand to secure domestic food supplies.

Rice-growing nations across the world are ramping up output after prices surged to a record in April, driven by export curbs by some producers and increased demand. The gain may help to curb export prices, damp inflation and prompt growers such as India and Vietnam to abandon trade restrictions.

Thailand, the world’s biggest rice exporter, cut the benchmark export price of white rice in July by 2.9 percent to the lowest in three months due to the bumper crop harvest this year and sluggish overseas demand.

Cambodia, the world’s seventh-largest rice supplier, lifted a ban on exports last month after rains boosted output. The country, which borders Vietnam, will probably produce 6.8 million metric tonnes of unmilled rice this year, up from 6.7 million tonnes a year earlier, according to the farm ministry reports.

Bio-diesel takes Away Maize from Food Chain

Among all major food and feed commodities, the additional demand for maize (a feedstock for the production of ethanol) and rapeseed (a feedstock for the production of biodiesel) has had the potential for the strongest impacts on prices. For example, out of the nearly 40 million tonne increase in global maize utilization in 2007, almost 30 million tonnes were absorbed by ethanol plants alone, mostly in the US which is the world’s largest producer and exporter of maize. The shift of maize towards industrial use means a jump in demand for wheat and rice.

Based on the current forecasts, the global share of cereal imports by countries in Africa is about 22 percent, while its share in exports is roughly 3 percent. Total wheat imports in Africa are forecast at 29 million tonnes, up 1.2 million tonnes from the previous season. Total imports of coarse grains (comprising mostly maize and barley) are forecast at 16.6 million tonnes, up 1 million tonnes from 2006/07. Rice imports are forecast at 9.6 million tonnes, marginally above the previous season. Africa’s total cereal import bill in 2007/08 is forecast at US$2.7 billion, up 23 percent from 2006/07.