September 22nd, 2011
12:53 AM GMT
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Hong Kong (CNN) – Care for some Japanese sushi, Spanish paella or Vietnamese pho for your next meal?

Or maybe just a steamy bowl of white rice to go with your Filipino adobo, Indian red curry or Indonesian beef rendang?

About one of every two people in the world relies on rice as a staple food, according to the Manila-based International Rice Research Institute.

So if the price of rice jumps, nearly half of the global population could be impacted.

HSBC noted Tuesday that the cost of the consumable commodity is rising – and will continue to do so.

Over the past six months, the global bank has found the price of rice has risen by 7.2%. In that same period, the price of another staple – wheat – has fallen 4% while the IMF’s World Food Index shows the average commodity price has dropped 2.2%.

So, what’s wrong with rice? It turns out Thailand, the world’s biggest rice exporter supplying one-third of global demand, is a primary cause.

New Thai Prime Minister Yingluck Shinawatra, just elected in July, is following through on a domestic campaign promise that’s pushing the international price of rice.

Her pledge: to buy the commodity from the country’s rural farmers – part of her electoral base – at a price as much as 40% above current market cost.  That’s equal to about $500 per metric ton.

With the hope of a higher payout on the horizon – the policy takes effect October 7 – rice traders and consumers are starting to hoard, pushing the price higher too.

A secondary catalyst for rising rice prices is Japan.

The Fukushima nuclear disaster stemming from the March 11 quake and tsunami irradiated the land.  An estimated 1.5 million tons of rice was lost. Japan, largely self-sufficient in past rice production, may soon scoop into the international market to compensate.

And with more expensive rice from Thailand and more demand from Japan, that could cause hoarding in other rice-producing countries.

We saw this in the spring of 2008, when the price of rice rocketed to more than $1000 per metric ton.

Vietnam, the world’s second-largest rice exporter, chose to restrict its exports to keep domestic prices low – instead of increasing exports to help boost global supply.

So, which countries are most sensitive to more expensive rice?

HSBC points to the Philippines, Malaysia and Indonesia as most susceptible to swoons. Rice is weighted more in those countries’ domestic consumer baskets than all other Asian countries. And with the Philippines in particular, rice makes up about 9% of that country’s basket – the highest percentage in all of Asia.

Looking ahead, HSBC says we shouldn’t expect to see the rice price spikes we saw in 2008.

But as of August, rice was trading at about $570 per metric ton. That’s a 17-month high, according to Index Mundi.

And the price of rice is expected to keep rising.



soundoff (21 Responses)
  1. xybr

    Thailand enjoyed it, because its part of business, the old number one producer are now relying on them for the sake of rice, these should be halted, for the sake of many. we need bargaining.

    September 22, 2011 at 3:10 am |
  2. fall

    The current Thai prime minister Yingluck (sister of the fugitive Thaksin) increased the price of rice the government buys from rural farmers in order to gain support for her elections. Now she is elected she has to adhere to her promise, price of rice should never have increase – plain and simple. Its all for her greedy benefits of being a PM without any political experience.

    Only farmers who opt into her rice pledge program will benefit, that is roughly 500,000 farmers out of the 2 million or so small farmers in Thailand.

    Now millions of poor people will have an even harder time buying rice if it increases 40%.

    September 22, 2011 at 4:23 am |
  3. ESMERALDO C. MARTIN JR

    The lowest price of rice in rice-producing provinces in the Philippines is 30 pesos per kilo. This time of the year is harvesting season but the price of rice has not change a bit.

    September 22, 2011 at 10:30 am |
  4. gary

    what is "the global bank" referred to in this article?

    September 22, 2011 at 3:12 pm |
  5. scndnv

    Awesome. As long as they don't add biologically engineered corn to it or pull some ridiculous american trick, I'm all for them making a profit.

    September 22, 2011 at 4:19 pm |
  6. Quje

    Rice is the key to survival for most Asians, not it terms of culture, but in terms of health also. Most Asian digestive systems cannot survive just on flower. Despite many cultures eating noodles (various types), rice is still part of a diet that has been around for thousands of years. To change that is to try to change the digestive system of many. This could possibly cause intestinal diseases (?). Rice also helps minimize obescity. Although a carbohydrate, its a damn good carbohydrate. I think the Thai government should consider the global ramifications rather than its own political gain.

    September 22, 2011 at 4:29 pm |
  7. Oh that's right

    I wouldn't be able to survive on flower either.

    September 22, 2011 at 4:37 pm |
  8. lolface

    Both rice and corn are used in most products and for livestalk, both are going away and in less than 40 years we will be looking at rampant starvation in western countries.

    September 22, 2011 at 4:54 pm |
  9. lolface

    gary – there is an actual bank called the global bank.
    oh thats right – yes you would, you just so modernized that you tooo dumb to know how to use flower to make anything.

    September 22, 2011 at 4:56 pm |
  10. The One

    No, everyone knows you can use flower to make bouquet. Most people know you use FLOUR to make food.

    September 22, 2011 at 7:21 pm |
  11. Poor poor

    Next year could be worse. The nation wide ongoing floods in Thailand will surely affect the rice production. BTW the policy by the current Thai government may not even benefit Thai farmers. Behind evey rice policy there are always bad people down the production line trying to take advantage.

    September 23, 2011 at 1:04 am |
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    September 23, 2011 at 4:05 am |
  13. desert voice (troubledgoodangel or Nathanael)

    America could pay farmers all over the world to produce cheap best quality rice! She then could sell it at a good uniform price. There are places on earth where conditions are ideal for rice. Why not buy those areas and start growing rice? I see for instance a good potential in Argentina's Corrientes and Chaco, and of course in Brasil. The Philippines could also produce rice for America.

    September 23, 2011 at 11:11 am |
  14. Duncan Macdonald

    As the world rice price has been above $450 per metric ton since Feb 2008 and has been well above $500 for all but 4 months of that period, I would not consider it unreasonable for the farmers (who do the bulk of the work) getting $500 per ton. (Price data from indexmundi.com)
    The shameful part of rice prices is the amount that goes to the commodity traders that do little but increase the price of the rice for the end users.

    September 23, 2011 at 2:44 pm |
  15. A Little Bird

    The farmers deserve a hard earned break. The higher prices mean a better income for the dirt poor farmers who break their backs in the sun and rain to produce the rice and other food.

    September 24, 2011 at 4:02 am |
  16. Greg

    The Thai prime minister is going to be in for a rude shock. She's hording all that rice to buy the popular vote in Thailand. The shock willcome when the rice buying countries around the world find other sources of rice and leave Thailand out of the picture. Then of course the stock and the farmers fields of rice will drop in price leaving Thailand and the farmers the big losers.

    Greg

    September 24, 2011 at 8:05 am |
  17. Beefburger

    Philippines has been working hard to become a zero rice import country. While rice may "only" be about $.50 per 2Lbs you have to remember that the national minimum wage is $5 per DAY. With few jobs maybe 1 or 2 workers per household of 3 or 4 generations all sharing the same house. I am very surprised that they had rice listed as only 9% of consumption as every place and home I was a guest in the rice was a majority of the meal. All this being said Filipinos can all send a big F... Thank You to the Thai PM if it affects their slim margin of survival.

    September 24, 2011 at 1:20 pm |
  18. Beefburger

    BTW, I certainly would not expect that bump in price to "trickle down" to the farmers.

    September 24, 2011 at 1:23 pm |
  19. Craig

    Refined white rice has very little nutritional value compared to other staples. This is a good opportunity for many to get healthier. Most of the countries that will feel the impact are 3rd class anyway and this will drive them down even further.

    September 24, 2011 at 4:41 pm |
  20. a man named god

    Mankind, no matter what nationality, will always choose greed over feeding the hungry. This is why humans will become extinct in the next decade or two. We are a miserable breed, who kill for no reason....

    September 24, 2011 at 9:03 pm |
  21. Taha Lateef

    "Vietnam, the world’s second-largest rice exporter, chose to restrict its exports to keep domestic prices low – 'instead' of increasing exports to help boost global supply." I don't see a problem with that. Why is Vietnam to consider global prices and global consumers ahead of the local prices and local consumers? Are the other countries such as the US and EU doing this? Rather they have implemented protectionist policies for their own growers. How then do they have the moral justification to say anything of this sort?

    September 26, 2011 at 5:03 pm |

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