Panic, rationing, questions, and turmoil in the rice market — yet the year is only half over. Regarding international politics and economics, rice remains king.
Rice has a phenomenal capacity to measure the economic pulse of countries. It can topple government leaders, spark mass protests, trigger food riots, and generate mass hoarding of stocks, and it often serves as the sustaining staple of Third World countries.
Speaking at the Mississippi Farm Bureau Federation’s annual Summer Rice Grower Meeting, Cleveland, Miss., Dwight Roberts presented an update on the condition of the world rice market, and detailed Latin American possibilities for the export of U.S. rice.
Roberts, executive director, U.S. Rice Producers Association, Houston, Texas, believes international unrest over rice stocks will continue in 2008.
“With rice, it’s always an interesting year, but nothing as interesting as what we’ve been through this year. We’re kind of in a lull between old crop and new crop, but still there is a tremendous amount of demand in the Western hemisphere for U.S. rice. In other countries, rice is a fundamental issue.”
2008 has seen a remarkable level of turbulence and chaos resulting from rice demand. Thailand was the stage for a surreal scene where armed guards marched along with combines harvesting rice. In the Philippines, heavy prison sentences were mandated for anyone caught hoarding rice. In Haiti, the prime minister was removed following protests due to high rice prices.
Roberts described the ripple effect of the April 2008 rice limit announcement by Costco and Sam’s Club. “I was at the Rice Congress of the Americas in Brazil when Costco or Sam’s talked about rationing rice. At that meeting, which was for Latin America — we had 13 countries from outside the Western Hemisphere. It just sent panic, and made everyone think the United States was rationing rice and desperate. We got calls from Mexico wondering if the United States was going to ban exports of rice.”
Globally, particularly in Asia, a number of countries now maintain large rice intervention stocks. When the international price of rice rises too high, the stocks are released and prices are held in check. The intervention stocks serve as a vital pressure valve to quell potential unrest and panic.
Roberts expects more distress in the market over the coming months. “I think over the course of the next 12 months, we’ll see the market do some alarming things. Thailand says it will export 10 million tons this year. It is at 61 percent of that already now. It has been exporting 1 million tons per month. If it was on course for 10 million, it should be exporting about 600,000 tons per month.”
He says other major players, including India and Vietnam, don’t appear ready to ramp up exports. “This is an area that causes concern for us. Rice is the food stamp of the world. It is the most political food in most areas.”
As with most issues of international politics and economics, China stands to play an increasing role in the rice trade, with 600 million people moving from poverty to the middle class within the next 10 years.
“China could eat the entire U.S. rice crop in three and a half weeks. A lot of rice has gone out of production. The demand created from people moving up to the middle class means they want to eat more protein. They want beef and chicken. To get beef and chicken means feed grains and fuel. There’s been a considerable shift in acreage — they’ve taken about 7 million acres out of rice production in China,” said Roberts.
Following the 2008 Olympics, he believes, China will begin formally producing genetically engineered rice. Reports out of China indicate funds have already been budgeted for GE rice production.
“China is going to be the first to do it (GE rice), and I think you’re going to see India, and others, come right along behind. I think that will stir the debate here in the United States.”
Regarding his main focus, Latin America, Roberts noted that the huge demand for U.S. rice continues. Mexico is a growing market, and while not a big per capita consumer of rice, the population of 100 million has tremendous potential for U.S. rice producers.
“They are a bean and corn country. But rice consumption continues to go up. In poor economic times, rice will always be there, because it’ll fit the needs of the low-income people.”
Central America remains in need of rice, and is negotiating the new crop as it prepares to buy. In 2007, Central America imported approximately 700,000 tons of U.S. rice, a record year.
Roberts is an advocate for investment by U.S. rice producers in Latin America. “It makes sense to invest our time and money in our backyard — the Western Hemisphere. That’s where the long-term growth possibilities are good for farmers in the Delta.”
He cites the school lunch program sponsored by U.S. Rice Producers Association as an example of beneficial investment. The program, applied in Central America, has been a marked success. Other countries throughout Latin America have taken notice and made inquiries — even countries that are rice exporters, such as Argentina.
“We gladly share that information because increasing rice consumption anywhere in the hemisphere is good for all of us. Columbia and Peru are two countries where we’re going to implement the program in 2009.”
Venezuela, a consistent wild card in the Western Hemisphere, remains a question. Although Venezuela has not bought U.S. rice the last few years, consumption has increased considerably, oil revenue is up, and Roberts expects to see a change. “I think we’re going to see a considerable amount of U.S. rice headed to Venezuela.”
In contrast with its Latin America neighbors, Cuba is well behind its rice imports of past years. Rice prices remain up, and Cuba has shied from the market. “The prices have been too high for them. When poor countries can’t afford the price of rice, they force the public to eat something else. They’ll take noodles and chop them up into tiny pieces so they resemble rice. It’s what they do in Haiti, Cuba, or parts of Africa.”
Roberts believes rice will remain the political crop of note in 2008 and beyond. “I’ve always known that rice is more unique than the other commodities, because it’s the food staple of the world.”