Asia's food security hinges on rice grower India

CEBU, Philippines — Rising rice prices and possible shortages in the world's poorest countries will hinge on what major growers India, China and Thailand do to make up for millions of tons of the staple lost to floods and droughts, officials said Thursday.

All eyes are on India, traditionally one of the world's top rice exporters, which may import 1.1 million tons (1 million metric tons) to 3.8 million tons (3.5 million metric tons) next year to replace production losses after a drought ravaged the country's rice bowl.

"Just the fact that India has significantly reduced production alone is a significant development given the tightness of supplies that we see in the world today," said Jim Guinn, vice president of USA Rice Federation.

"But the fact that they may actually be an importer is of even more importance," he said.

India's return to the import market is viewed as pushing up the price of benchmark Thai 100 percent Grade B rice, which this month traded at $530 per ton (metric ton), though still down from more than $1,000 at the height of last year's food crisis.

Robert Papanos, a trader from Seacor Commodity Trading LLC, told an international rice conference in the Philippines that prices were bound to rise because India was unlikely to return as a top exporter for three to five years due to recent blows to its rice production, pressures to increase food supply for its booming population, lack of land and problems with water.

"It means that supply for world trade loses roughly 4 million tons," he said, adding that that allows top exporters Thailand and Vietnam to "drive the car" and influence prices.

India will import rice next year, or threaten to, not because of trade reasons but domestic politics, he added.

But Papanos warned of higher unpredictability in the market because of weather anomalies, new political interference by governments, and rising costs of crude oil and farm inputs.

Guinn said other factors that could influence prices include whether China will export or not, and if Thailand releases its bumper stocks. China holds half the world's rice stocks and has been exporting on-and-off.

"The circumstances are there certainly for another panic in the marketplace," Dwight Roberts, president and CEO of U.S. Rice Producers Association, told The Associated Press.

India's possible shift to wheat consumption may not be enough to stop the country from importing, Roberts said.

"In Asia, if you don't eat rice, you don't eat," he said. "Rice here is a religion as much as a food product."

The 2008 rice crisis demonstrated that the crop "is a very political commodity," Roberts said.

Last year's record-high price of rice and other staples led to riots in at least 30 countries, according to the World Food Program. The biggest producers, Thailand, Vietnam and India, had curbed exports to protect domestic supply. In the Philippines, people queued to buy low-quality rice at subsidized prices while traders were suspected of hoarding.

Philippine Agriculture Secretary Arthur Yap said Wednesday that any rice crisis similar to last year's would hurt developing countries like his, the world's top rice importer.

The Philippines says it has lost at least 925,000 tons (840,000 metric tons) due to recent back-to-back storms.