Asian nations feel the pinch as price of rice keeps soaring

For the likes of Thailand and Vietnam, the world’s two biggest exporters of the grain, the rising demand is a money-spinner with rice now selling at more than US$500 a ton in Bangkok and nearly as much in Hanoi.

But from Bangladesh to the Philippines, from India to Indonesia, the squeeze is bad news as they seek to balance cost with the imperatives of feeding hungry populations and averting social chaos.

“Every Asian government is well aware of the close relationship between political stability and the stability of the rice price,” Jonathan Pincus, the U.N. Development Program’s chief economist in Vietnam, told AFP.

“So every government in the region will be doing all it can to maintain price stability, particularly for basic food grains.”

At the end of February, Thailand’s benchmark rice was trading at more than US$500 a ton, a rise of more than US$100 from a month earlier and up from just US$325 a year ago.

Exporters in Vietnam, meanwhile, were setting prices at US$460 a ton last month, the state news agency VNA said — up more than 50 percent from a year ago.

“It’s a global issue. All cereal prices are going up,” said Andrew Speedy, the U.N. Food and Agriculture Organization’s Vietnam representative.

“This is quite serious. It’s hurting everybody, especially the poor.”

In the first two months of 2008, Vietnam’s rice exports brought in US$150 million, an increase of 78 percent from a year ago.

Much of the output is destined for the Philippines, whose President Gloria Arroyo asked Vietnamese Prime Minister Nguyen Tan Dung last month to guarantee stable supplies.

Unable to meet its own needs, the Philippines will import up to two million tons of rice this year, according to the government.

Last year its harvest was 6.44 million tons, National Food Authority spokesman Emmanuel Salonga said, but it needs 11.8 million a year.

“Our population is growing and arable land is being converted to other uses so we cannot cope with demand,” he said.

Indonesia’s rice production has been outpaced by its population growth for more than a decade, said Mangara Tambunan from the country’s Center for Economics and Social Studies.

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