Burma cyclone could further cut back rice supply, FAO

By Clarisse Douaud

- Last updated on GMT

Related tags: Rice, Agriculture, United nations

The effects of Cyclone Nargis, which ravaged Burma (Myanmar) on May
3, are now expected to spread to rice markets and further squeeze
dwindling supplies, the UN Food & Agriculture Organization said

With a rising death toll that now stands at over 22,000 people, the cyclone hit five of Burma's agricultural regions and submerged them in water. This affected both rice paddies and rice store houses. "The five states produce 65 percent of the country's rice, and have about 50 percent of all irrigated areas. There is risk that stored rice seeds kept by farmers - usually under poor storage facilities - might be affected by the cyclone,"​ reported the FAO in Bangkok. According to FAO figures, the country was expected to export 600,000 tons of rice in 2008, amounting to nearly one percent of world production. "Based on the rice crop calendar, Cyclone Nargis which just hit Burma may have affected the 2007 secondary paddy crops, which are normally harvested between April and June,"​ said FAO's report. "However, without a proper assessment of crop damage, it is difficult to gauge how the final 2007 paddy production will be impacted." ​ As supplies dwindle, it can also be expected that the price of rice will rise even further than it already has. Amid these fears, rough rice futures at the Chicago Board of Trade soared by $0.75, the maximum allowed amount by the futures and options exchange, to $22.35/100lbs. Adding to a fallback in supply will be the fact that rice will now have to be imported into Burma, no longer able to feed itself, thereby putting added pressure on global supply. The UN World Food Programme in March called on donors to fund an additional $500mn to help them respond to an approximately 55 percent increase in food and fuel prices around the world. The situation has become critical, with civilians taking to the streets - such as in this week's violent protests in Somalia - to demand access to food. In the case of rice, demand has increased, but supply has not kept apace. The crisis has sparked fears that countries relying heavily on rice imports - like the Philippines or Nigeria - will sweep away further supplies by stockpiling for the future, or that rice exporters will continue to cut back or place heavy tariffs on their exports. This year, four of the leading rice exporters - China, India, Egypt and Vietnam - have either imposed minimum export prices, export taxes or export bans on rice to protect against inflation at home. This will reduce the amount of rice traded internationally by 1.1 million tons compared with the 2007 trade, said FAO. According to the organization's latest estimates, paddy production rose by 1 percent in 2007 to 650 million tons. It is the second consecutive year where production growth fell short of population growth. Meanwhile, as a long-term solution, the FAO is promoting grassroots efforts to boost agriculture production and make underdeveloped countries more self-sufficient for their food needs, and therefore less vulnerable to international price fluctuations. "We must produce more food where it is urgently needed to contain the impact of soaring prices on poor consumers, and simultaneously boost productivity and expand production to create more income and employment opportunities for the rural poor,"​ FAO Director-General Jacques Diouf said last week. Diouf also called for freer markets to encourage more production. "To ensure that small farmers and rural households benefit from higher food prices, we need to create a favorable policy environment that relaxes the constraints facing the private sector, farmers and traders,"​ he added. World leaders are meeting June 3-5 in Rome to discuss the issue of food prices at an FAO conference on food security. Confirmed guests include the Presidents of France and Brazil, as well as UN Secretary-General Ban Ki-moon.

Related topics: Cereals and bakery preparations

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