Bumper rice harvest for 2008, FAO
according to the UN Food & Agriculture organization (FAO) which
has quelled fears that sharp price hikes will continue
"World paddy production 2008 could grow by about 2.3 percent reaching a new record level of 666 million tons, according to our preliminary forecasts," said FAO rice expert Concepcion Calpe. "But the cyclone disaster in Myanmar could well worsen our forecast." In the aftermath of Cyclone Nargis which hit Myanmar May 3, the price of rice went steadily up based on fears of loss of production in the devastated region. However, FAO has now said that a simultaneous boost in production this year will offset shortages over the long run. The organization announced that while world rice prices are likely to remain high in the short term, as the world waits for 2008 crops to be harvested, this could be offset when more rice makes it to market. Between December 2007 and April 2008, the price of rice has shot up by approximately 76 percent, according to the FAO Rice Price Index. Fear surrounding prices in turn led some of the main rice producers to block imports and stockpile. "Prices are expected to remain extremely firm, at least until the third quarter of 2008, unless restrictions on exports are eased in the coming months," Calpe said. 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 2007 trade, said FAO. Also, auctions by the Philippines to import massive volumes of rice added to the price hikes. "At the moment, only Thailand, Pakistan and the United States, among leading exporters, are exporting rice without any constraints," said Calpe. When large importers that have retreated from the global rice market return to their former purchasing levels, further pressure will be put on production. Iran, Saudi Arabia, Nigeria and Senegal are among those importers expected to return to former buying levels. Offsetting this however, according to FAO, is the fact that production is now set to go up in Asia. "For the first time, paddy production in Asia may surpass the 600 million ton benchmark this year, amounting to 605 million tons," said Calpe. According to FAO figures, Myanmar was expected to export 600,000 tons of rice in 2008, amounting to nearly one percent of world production. The five states hit by the devastating cyclone produce 65 percent of the country's rice. In addition, the cyclone plundered paddy farmers as they were harvesting their dry season crop, which accounts for 20 percent of annual production. World leaders are meeting June 3-5 in Rome to discuss the issue of food prices at an FAO conference on food security.