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Increasing Rice Prices in Emerging Countries

January 25, 2011

IRRI, or the International Rice Research Institute, states more than 3 billion people depend on rice. In today’s WSJ another article, Emerging World Tackles Food Costs, lays out the actions being taken to avoid a food crisis.

Fast-growing emerging nations are taking increasingly aggressive actions to beat back rising food prices as they grow more worried of threats to stability if prices don’t start to retreat.

Developing-market governments have unveiled a laundry list of measures—including price caps, export bans and rules to counter commodity speculation—to keep food costs from disrupting their economies as price spikes that some had hoped were temporary have stretched into the new year. Some economists worry that any further supply shocks could push prices even higher, triggering a food-price crisis like the one the world witnessed in 2008, when higher food costs led to violent unrest across the developing world.

In addition to removing tariffs, Indonesia plans to spend up to 3 trillion rupiah, about 331 million, to help residents hurt by price fluctuations and is also calling on other developing countries to avoid hoarding rice or restricting rice exports, measures which contributed to the 2008 panic, said Mari Pangestu, Indonesia’s trade minister.

Rice Facts

One fifth of the world’s population—more than a billion people—depend on rice cultivation for their livelihoods. Asia, where about 90% of rice is grown, has more than 200 million rice farms, most of which are smaller than 1 hectare. Rice-based farming is the main economic activity for hundreds of millions of rural poor in this region. In Africa, rice is the fastest growing staple. This increase in the demand for rice is also true for Latin America and Caribbean countries.

In most of the developing world, rice is equated with food security and closely connected to political security. Changes in rice availability, and hence price, have caused social unrest in several countries.

To keep rice prices stable and affordable at around $US300 million a ton, IRRI estimates that an additional 8-10 million tons of rice needs to be produced every year.

The challenge, above anything else, is to produce this additional rice with less land, less water, and less labor, in more efficient, environmentally-friendly production systems that are more resilient to climate change, among other factors.

Rice is the most important food crop of the developing world and the staple food of more than 3 billion people or more than half of the world’s population. In 2009, 640 million undernourished people living in Asia were dependent on rice.

Rice provides 21% of global human per capita energy and 15% of per capita protein. Although rice protein ranks high in nutritional quality among cereals, protein content is modest.

For example, in 2008, when rice prices tripled, the World Bank estimated that an additional 100 million people were pushed into poverty.

About IRRI
IRRI, or the International Rice Research Institute, is a nonprofit independent research and training organization.

IRRI develops new rice varieties and rice crop management techniques that help rice farmers improve the yield and quality of their rice in an environmentally sustainable way. We work with our public and private sector partners in national agricultural research and extension systems in major rice-growing countries to do research, training, and knowledge transfer. Our social and economic research also informs governments to help them formulate policy to improve the equitable supply of rice.

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