Asian nations feel the pinch as price of rice keeps soaring

To ensure stability, a government agency buys and releases stocks and sets import duties. Heavily subsidized rice is also sold to millions of the poorest families, yet even those prices are rising.

“They’re trying to get producers to sign long-term contracts,” the UNDP’s Pincus said, referring to Indonesia and the Philippines.

“But who’s going to sign a long-term contract now for rice deliveries when prices are rising so quickly and so steadily? No one wants to be left without adequate stocks, and that contributes to driving up the price.

“They’re willing to pay a higher price for future deliveries because they don’t want to be caught short.”

In Bangladesh, which has a population of 144 million, the price of rice has doubled in a year, vastly outpacing income levels, said Ruhul Amin, deputy head of the government’s food planning unit.

“People are cutting all their other spending to focus only on food,” Amin said, but with 40 percent of the population relying on a dollar a day or less, the poorest are struggling to survive. “They have to survive on a pittance, and the rises are causing a general feeling of gloom and depression,” he said.

This year Bangladesh will need to import some three million tons due to damage caused by floods in mid-2007 and November’s devastating cyclone.

Some of that is coming from neighboring India, but otherwise New Delhi has halted exports of non-basmati rice to keep its own domestic prices in check.

India allowed the export of 3.2 million tons of non-basmatic rice in the first half of the current financial year, but since October no new contracts have been signed.

The move has upset the All India Rice Exporters’ Association. “Farmers react to high prices by producing more,” said its president, Vijay Sethia. “Restricting trade just distorts the price signal.”

For now, some nations appear insulated against rising prices. China, Japan and South Korea are largely self-sufficient and protect their rice sectors via steep import tariffs or heavy subsidies.

In Japan, the price of high-quality rice is even waning with falling demand as younger Japanese turn to bread and Western-style dishes.

As for China, its severe cold snap earlier this year is unlikely to impact production much as it was not the planting season.

The freeze may drive up prices, said Feng Lichen, a trader at the Dalian Commodity Exchange, but said the government was using tax breaks and subsidies to ease the pressure.

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