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Home News Rice price jumps 10% in South China for severe drought - China's Dams may cause world starvation

Rice price jumps 10% in South China for severe drought - China's Dams may cause world starvation

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GUANGZHOU - The price of rice in most shops in this Guangdong provincial capital have increased 10 percent in the past month due to the severe drought in southwestern China.

Huang Weijuan, a Guangzhou housewife, said she spent 55 yuan ($8) to buy a bag of rice in Taojin agricultural bazaar in the city's Yuexiu district over the weekend. 

Previous rice shortage
Related readings:
Price of rice rises in south China Drought in China caused by climate change: experts
Price of rice rises in south China Cloud seeding brings rainfall to drought-hit SW China province
Price of rice rises in south China Drought affects 24 million people in Yunnan
Price of rice rises in south China China asks youth to donate water to drought-hit areas

"But the price for the same bag of rice, which weighs 20 kg, was about 50 yuan a month ago," Huang said. 

And the price of courgette, a vegetable which mainly grows in Yunnan province, is now selling at 5 yuan per kg in the bazaar, up 0.5 yuan from last month, Huang said.

"The price of many foods and vegetables have gone up in the past month and I worry that prices will keep increasing," she said.

"I've heard in the media that the drought in southwestern China will not ease up until May," she said.

According to a report from Guangzhou-based Yangcheng Evening News, some traders have been investigated for trying to corner the market for rice and Chinese herbs in case of a future price hike in Guangzhou.

And relevant departments have promised to launch an investigation and punish those who illegally raise prices.

A grocery boss who only gave his family name as Mo said he had to raise the price of rice because his costs have grown in the past month.

Zeng Xingfu, deputy director of the price supervision center under the Guangdong provincial bureau of prices, however, refuted the drought in southwestern China had led to the price hike for rice, vegetables and other foods in the southern province.

"Southwestern China, including Yunnan and Guizhou provinces that have been hardest hit by the drought, is not a major grain production base in the country, and the provinces in southwestern China are not the major source regions for Guangdong's grains," Zeng said.

He said Guangdong mainly purchases grains from bordering Hunan and Jiangxi provinces.

"The drought in southwestern China will not result in the fluctuation of grain prices in the whole country as China achieved bumper grain harvests six years running up to the end of 2009," he added.

Affected by the severe drought, the prices of tea, fresh flowers and some Chinese herbs that are mainly produced in southwestern China have witnessed big increases in Guangdong in the past month.


Thailand rice exports to China may fall sharply

BANGKOK (Commodity Online) : World’s largest rice exporter Thailand’s rice imports to China is likely to be trimmed due to unstable prices and exchange rates.

Thai rice exporters association said, unstable prices and exchange rates are threatening the competitiveness of its rice exports to China, one of the major importers of Thai Hom Mali rice.

They said imports of Thai rice to China would fall this year due to the instability of Thai prices, said the association in a statement.

"Thai rice prices are fluctuating due to inconsistency in many government price guarantees. This has destroyed importers' confidence in the reliability of imports of Thai rice," it said.

Association called on the Thai government to ensure a stable price to reassure importers.

China is one of the major importers of Thai Hom Mali (jasmine rice). Thai rice exports to China saw a sharp drop of 80.96 per cent to just 11,841 tonnes in January.

China’s major importer Chengdu Jinxiong Trading normally imports 3,000 to 4,000 tonnes of Thai Hom Mali rice a year. However, the company is expected to reduce its imports of Thai rice this year by 10 to 20 per cent due to high prices and the global economic slowdown, which has caused a drop in consumer purchasing power.

To ensure that Thai rice sales in China are not affected by the economic crisis, the Thai government must stabilize the rice price and exchange rate, analysts said.

Moreover, excessively high prices for Thai Hom Mali have led to the combining of rice types, damaging the reputation of Thai rice, they said.

Vietnamese rice is currently quoted at about $480-$600 per tonne. Thai Hom Mali rice is quoted at $889 per tonne, while Pathum Thani rice is quoted at $725.

Southwest drought affected people's livelihood: rice prices rose in some areas such as power cuts

March 23, in Nanning Wuliting vegetable wholesale market, workers will be "Vegetable Love" loaded cars destined for drought-stricken areas.
Day, the Agriculture Department of Guangxi Zhuang Autonomous Region will be worth 200 thousand yuan to 125 tons of "Vegetable Love" destined for the East Portland, Bama, Fengshan, music industry, such as four areas of severe drought, drought-stricken areas to help people through difficult times. Xinhua News Agency issued (He Liang Army photo)

Since late last year in southwest China's prolonged drought, caused not only drinking water and crop yields were affected, but also the people's livelihood is being affected areas. Necessities from the residents in the rice, sugar prices in the capital markets related stocks are blitz, prices, resource prices, stock prices have become the focus of attention of various sectors.

Rice prices are rising around the world

Although Southwest is not China's major grain-producing province, but since July 2009 has been a continuous drought has increased the market price of rice into the country. According to media reports, Shanghai, Chongqing and other places the phenomenon of rising rice prices has occurred, the Beijing market although small fluctuations, but analysts believe, the food is not enough to eat arid southwest, from the rest of the country Diao food, this could be the national rice up price incentives.

According to the National Bureau of Statistics released data on 22, Mar. 1-10 of 200 major producing counties in the major agricultural products, food categories showed up general trend, which rose 0.17% indica, japonica rose 0.46%, up 0.43% of wheat, corn up 0.68%. Professionals said that if the drought persists, southwestern part of the province will be severely affected agricultural production, agricultural products will increase pressure on prices, even in the second half the trend of prices will be affected.

Drugs, sugar, flowers, tea, price linkage

In addition to rice and other essential living food prices, general consumer goods is also affected by drought, drugs, sugar, flowers, tea prices have linked up.

Yunnan origin as an important medicinal March 7, Wenshan, 65 towns and all of the affected plant on March 7, affected an area of 53,906 acres, 83% of the total area. Compared to last year, on March 7 4,5 times the price has soared. According to incomplete statistics, the use of proprietary Chinese medicines on March 7 as the raw materials to produce over 300 varieties, more than 1,000 manufacturers, covering almost all the Chinese pharmaceutical companies. According to Chinese medicine industry analysis, March 7 price boom and the resulting impact on the relevant Chinese company is very worrying, these pharmaceutical companies would bring huge cost pressure. If further development of drought, the loss will further increase.

In addition, the second largest sugar cane as a base of white sugar production in Yunnan Province ranks second, Yunnan Province, is expected to cane sugar production this year will be tolls cut 4.5 million tons, compared to last year is expected to cut nearly 30%. In Beijing, the Beijing price of sugar has reached 5400 yuan per ton, close to the highest level in history.

In Hangzhou, southwest drought has spread continuously increasing prices of many commodities, because most of Hangzhou field of cut flowers from Yunnan air, at present, a rose in the wholesale price rose to 15 yuan from 30 yuan, sales flowers off-season prices are rising sharply, which makes a lot of flower shops and dealers business is even more cool.

Tea from Yunnan Province to do the statistics show that as at present, the severe drought caused 300 million mu of tea in Yunnan Province were affected, about 5 acres of tea dead. Spring Tea Yunnan cut directly led to the wholesale prices of local tea, many merchants have to reduce the current acquisition, the market price was also a significant gain. Beijing City specializes in Pu'er tea Maliandao business say, and compared to last year, cooked tea prices have gone up by 10% -20%, raw tea prices almost doubled.

Drought Threatens Vietnam's Rice Bowl

One of the worst dry periods in Vietnam's recent history has dried up riverbeds and aggravated saline water intrusion into coastal areas, threatening Vietnam's southern Mekong Delta, the country's rice bowl, said an U.N. expert here on Thursday.

Vietnam, world second largest rice exporter, will face a drop in spring-summer crop production this year, said Koos Neefjes, a climate change policy advisor of the United Nations Development Programme in Vietnam.

The Mekong River, connecting six countries in Southeast Asia, flows into the sea in southern Vietnam. A total of 12 provinces constitute the Mekong Delta, with 17 million people living and farming. The area's rice output stood at 20 million tons last year, about a half of the country's total production. It is one of world 's richest agricultural regions.

In the country's Mekong Delta, the temperature rose to above 35 degree Celsius at day time in the last three consecutive months. Water at rivers ran extremely low. Hot weather killed rice paddy and livestock, and made it difficult for people to access to clean water.

What was worse, water in some rivers in the Delta now contained a higher degree of salt as the sea water pushes inland farther at this dry season, threatening crops.

The Vietnamese Ministry of Agriculture and Rural Development recently forecast that at least 100,000 hectares of rice in the Mekong Delta are under threat. Meanwhile, Neefjes also said that if the weather does not change very soon, 500,000 hectares or even 800,000 hectares of rice would be affected in a few more weeks.

The Vietnam Institute of Hydro Meteorology and Environment said that the country's ongoing drought may last till May.

Neefjes said the worst scenario is that one fourth of the country's total rice output would be affected this year.

Some meteorologists said that this year's return of El Nino weather phenomenon is the mean reason of the drought. The Vietnam Institute of Hydro Meteorology and Environment said current drought is an aftermath of the El Nino.

The return of El Nino brought an unusually warm and dry winter last year, said the institute. The early end to the wet season last year and little rainfall in the first months of this year resulted the severe drought.

Neefjes also held that the cyclical El Nino is the primary reason for the drought. "Last summer, we predicted the drought for 2009 winter and 2010 spring through measurements and data. It is not a surprise."

Neefjes said this year is a weak El Nino year as the drought to some extent is not as worse as in 1997 and 1998.

Neefjes added that building dams and reservoirs could actually help mitigate the effects of drought. With reservoirs, people save water in wet season and release it in dry season. Given the fact that China's Yunnan province on the upper stream of the Mekong River is also suffering from drought and China has no water to release from the reservoirs, it is understandable that the meteorological reason causes the drought, Neefjes said.

Besides, a lot of the dams in Yunnan are built for hydropower purpose. That means water is stored and very soon released to generate power. In this way, water goes back to the river again, said Neefjes.

But the expert also said continuous deforestation and expansion of agriculture along the Mekong River have hampered the capacity of the river basin to store water.

Following the drought, the Vietnamese government has been working hard to cope with it. Vietnamese Prime Minister Nguyen Tan Dung asked ministries and localities to make plans to operate each irrigation system and adopt measures to save water and prevent the wasteful use of water.

But efforts seem not to be enough to deal with the drought, said the Prime Minister and experts.

Mekong Region Commission, a regional inter-government agency, said that countries of the region are not as familiar with drought management as with flood preparedness.

The commission said that climate change effects are likely to intensify both flooding and drought over coming years. Governments should be pay more attention for policy and practical level in drought management.


Thailand Facing Severe Drought along Mekong River

2010-04-02 11:09302


The dry season arrived much sooner than expected for farmers in Thailand's northernmost province of Chiang Rai.

And it has brought them the most severe drought in decades.

Water levels in the Mekong, Southeast Asia’s largest river running from the glaciers of Tibet to the rice-rich delta of southern Vietnam, have dropped to a 50-year low.

One farmer says his second crop of rice is already dying because there is not enough water to nourish the saplings.

[Prasert Rath-chakom, Farmer]:
"Right now, I can't see how the government can help fix the problems because the drought has severely intensified. They have not found an alternative water source for farmers so far."

Farmers usually pump water from the Kam River to irrigate their crops, but now several sand bars extend across the river that used to irrigate more 40 thousand acres of land in Chiang Rai Province.

[Prasert Rath-chakom, Farmer]:
"We take underground water to use for our second crop but it is not enough. It increases our cost, because fuel is expensive and there are still other miscellaneous costs. The water is really not sufficient.”

Digging to find underground water isn’t cheap.

[Wandee In-Thara, Deputy Chief, Chiangsaen District]:
"This crisis is unusual. When the dry season comes, normally there's still some water left in the pond. But this year, the Mekong River's levels have gone down dramatically, to something I have never seen before. We cannot pump enough water to use for agriculture.”

Wandee says villagers living along the Mekong River are relying on a small water station for their irrigation needs… but it can only irrigate around 80 acres a day.

Mekong Nations Call for China Assistance Amid Drought

By Daniel Ten Kate

April 5 (Bloomberg) -- Downstream nations along Asia’s Mekong River hailed China’s move to share data on reservoir levels and called for more cooperation as a severe drought heightens concerns that its dams have distorted water flows.

The dry weather has reduced Mekong water levels to their lowest in three decades, affecting more than 60 million people in the river’s lower basin, an area larger than the U.S. state of Texas. China agreed on March 25 to share water-level data at two dams to ease pressure from nations downstream, including Myanmar, Thailand, Laos, Cambodia and Vietnam.

“I would like to thank the Chinese government for this valuable cooperation,” Thai Prime Minister Abhisit Vejjajiva said today in an opening speech at the first-ever summit of Mekong nations in Hua Hin, Thailand. “I also hope that such genuine effort of cooperation would become more regular.”

The drought has raised scrutiny about management of the river as governments aim to harness its potential to provide food and generate electricity. Mainstream dams constitute “the single largest threat” to the Mekong’s wetlands, home to the world’s largest inland fishery, the Mekong River Commission said in an April 2 report.

China’s capacity to improve water flows is “limited” as the river’s low levels are mainly due to a shortage of rainfall, said Jeremy Bird, chief executive officer of the commission, a regional body that advises governments on managing the basin. Increased flows from China’s dams in January did help alleviate the severity of the water shortage, he said.

‘Fluctuating Unnaturally’

“The water in the Mekong River is not only drying up, but the water levels are fluctuating unnaturally,” Pianporn Deetes, an activist with environmental group International Rivers, said at a seminar at Chulalongkorn University in Bangkok last week. “Since the first dam was built, local people have seen a loss of fish catch and the destruction of aquatic resources.”

China and Myanmar, dialogue partners of the Mekong River Commission, both sent envoys to join the prime ministers of Thailand, Laos, Cambodia and Vietnam at today’s meeting.

The meeting “serves as an important wake-up call that the problems and challenges being faced by the Mekong River and states need to be addressed at the highest level,” Abhisit said. “The Mekong River is being threatened by serious problems arising from both the unsustainable use of water and the effects of climate change.”

Chinese officials have defended the country’s water management, stressing that it is also suffering from drought. Most rivers in southern China are at about 40 percent of normal levels and more than 600 have dried up completely, leaving almost 20 million people short of drinking water, said Chen Mingzhong, a ministry of water resources official.

‘Upstream Country’

“As an upstream country with a high sense of responsibility, we do nothing harming the interest of riparian countries downstream,” Chen said in a presentation to counterparts at the summit in Thailand. China contributes about 13.5 percent of water flows to the lower Mekong.

China has pledged to strengthen communication with downstream countries, inviting them to a training program on flood management in June. Floods on the 2,700-mile river in August 2008 claimed lives in Thailand and Laos.

China has completed four dams to date and another four are planned before 2025 for a total of 15,200 megawatts, enough to provide electricity for 75 million people. Another 11 dams are in various stages of development downstream in the lower Mekong that would deliver the same amount of electricity.

Not All Bad

“The Mekong has become one of the most active regions in the world for hydropower development,” the Mekong River Commission said in its State of the Basin report issued every five to seven years. The dams will “effectively stop” river fish migration, “leading to reduced production, substantial economic cost and social deprivation,” the report said.

“You cannot say all dams are bad,” said Thanin Bumrungsap, vice president of Italian-Thai Development Pcl, Thailand’s biggest construction company. Thai farmers, for instance, “couldn’t grow rice two or three times a year as they do now if there were no dams, no irrigation systems.”

Rice production in Thailand, the world’s largest exporter, may decline as drier-than-normal weather curbs yields. Officials have blamed the drought on the El Nino weather phenomenon, characterized by warmer sea-surface temperatures across the equatorial Pacific that can cut rainfall in Asia.

China’s first upstream dam became operational in 1993, with subsequent openings in 2003 and 2008. The country started sharing data on rainy season reservoir levels in 2002. Last month was the first time it shared data in the dry season.

Fish Catch

In the northern Thai province of Chiang Rai, the closest point in the country downstream from China, fishermen say their catches have declined in recent years. River levels can change by a few meters per day without warning, an occurrence they blame on the upstream dams.

“In the past few years it’s been hard to catch a lot of fish because of China’s dams,” said fisherman Sompon Kumla, who makes about 3,000 baht ($97) per month, down from 10,000 baht in previous years. “The government needs to talk to the Chinese and tell them to release the water.”

--With reporting by Supunnabul Suwannakij in Bangkok. Editors: John Brinsley, Patrick Harrington.

ASIA: People’s voice absent in Mekong river talks :  China's Damns


Photo: Contributor/IRIN

Along the northern border between Laos and Thailand, evidence of the drought's impact can already be seen

BANGKOK, 5 April 2010 (IRIN) - Millions of people living in and around Southeast Asia’s largest river, the Mekong, need a greater voice in determining its future, say activists.

“There needs to be more recognition of the voice of the people who depend on the river and what their vision of the river is,” Carl Middleton, the Mekong programme coordinator for the US-based NGO International Rivers, told IRIN.

“Decision-makers should listen better to the people that are affected by [infrastructure] projects.”

His comments coincide with the conclusion of the first ever Mekong River Summit on 5 April in the Thai coastal town of Hua Hin, which brought together leaders from China, Laos, Cambodia, Viet Nam, Thailand and Myanmar to discuss its management.

The summit, organized by the Mekong River Commission (MRC) to mark its 15th anniversary, comes at a critical time: the river’s water-level is at its lowest point in 50 years in Laos and northern Thailand.

Boat traffic has been halted along many parts of the 4,350km river, and fisheries and irrigation systems have been adversely affected.

Dams in China

While unusually low rainfall is widely believed to be responsible for the current low level of water in the Mekong, many environmentalists and NGOs claim China has exacerbated the situation by damming the river upstream.

China has four dams on the river and four more planned, but Beijing denies the dams are contributing to the current low level of the Mekong, and used the MRC meetings to reiterate its stance that natural causes are to blame.

"The current extreme dry weather in the lower Mekong river basin is the root cause for the reduced run-off water and declining water level in the main stem Mekong," Chen Mingzhong, deputy director-general of China’s Department of International Cooperation, Science and Technology, told a conference on 2 April that preceded the international summit.

On 4 April, China’s delegation promised increased cooperation among Mekong river countries on water management issues, particularly concerning its dams. This comes after China agreed for the first time ever late last month to share water-level data at two dams.

“This is a positive step,” Middleton told IRIN. A lack of rainfall is obviously a very important factor in the low level of the Mekong, he said, but questions remain as to whether China’s dams have also exacerbated the situation, or whether the dams could be used to alleviate the problem.

The summit focused on regional cooperation in solving drought and flooding problems in the Mekong region. The final joint declaration covered how the river can be used to reduce poverty, boost sustainable energy development, help people adapt to climate change, improve infrastructure and increase the involvement of civil society stakeholders in planning and decision-making.



Richard Cronin, head of the Southeast Asia program at the Henry L. Stimson Center in Washington, said both the Chinese and Lower Mekong dams will seriously threaten the viability of the Mekong Delta, Vietnam’s most important source of fish and its “rice bowl.”

“The dams will hold back the silt that rebuilds the Delta each year and keeps the East Sea at bay. Already, smaller alterations of the river’s flow in the Delta have created a major problem of seawater infiltration and land submersion.”

“The upstream dams will alter the river’s flow in still unpredictable ways, threatening the rice fields that produce 40 percent of Vietnam’s output and possibly making some population centers uninhabitable,” he said.

He also said the two threats less talked about are an earthquake that would rupture a Chinese dam in Yunnan, a seismically active region, or rains of such magnitude that the sluice gates would have to be opened to save one of these large to mega-sized dams.

“In either case, the consequences downstream would be catastrophic,” he said.

Larry Wortzel, member of the US-China Economic and Security Review Commission in Washington also said dams restrict the migration of species that live in salt water but come up-river into fresh water to spawn.

“Thus, some species of fish and crabs will not be available in parts of the Mekong. The other impact is that when you restrict the water flow of a major river system that flows into the ocean, the salt water ends up migrating up the Mekong Delta. This will affect agriculture in the Mekong Delta since water salinity will change,” he said.


China is making things difficult for downstream Mekong riparian countries by not providing accurate and timely information about its interventions in the Mekong River, experts said on April 3 at a conference that preceded the first Mekong River Commission (MRC) summit.

The riparian countries, including Vietnam, have asked China to provide better updates on its interventions, officials said at the conference.

Despite China’s participation at the two-day conference on Water Resource Management, Chaiyuth Sukhsri, lecturer at the Chulalongkorn University in Thailand, said the information that China has provided was not adequate and exact.

Chaiyuth, an engineer, said China never gave all the information at once but only gave it “drop by drop” to see how other countries would react and based its next moves on the reactions.

He suggested that stations be built along the China border to measure water levels and learn how China is operating its dams at particular points of time, for instance to know when the dams are discharging or holding water.

Le Duc Trung, office chief of MRC Vietnam, said “any operation in the river will leave an impact. Power dams that hold water will cause certain effects.”

When China began operating the Man Loan dam in 2003, Laos suffered draught in several areas.

“[The dams] will always cause impacts, the issue is how and how much,” Trung said.

China has agreed to share information on river flows and dam operations, the MRC said in a media release on April 5 on its first summit early this week.

“In a side meeting between the MRC and China at the Summit, China provided further hydro-meteorological data concerning the operation of its dams on the mainstream Mekong during the current dry season,” it said.

The first MRC summit comes at a time large swathes of the river in downstream countries like Laos resemble a desert, affecting fisheries as well as maritime trade. China has also been affected by this, but critics say its rejection of the contention that upstream dams are responsible for the situation makes it difficult to take mitigating steps.

Americans are some of the lowest consumers of rice but for most of the rest of the world it is the staple crop that keeps poorer consumers alive. The doubling of rice prices, coupled with rising prices for virtually all grains, is a major concern. While the US is an exporter of rice, many countries are now restricting exports to try to control prices. In a global economy this won’t work because you cannot have a commodity priced differently in two or more places- sellers in the cheaper country will find a way to sell in the more expensive one (one exception to this is the price of sugar in the US, held artificially high and protected from cheaper exports to the benefit of a few wealthy US sugar producers- a rant for another place!).

Rice, as a crop, is exceptionally sensitive to climate changes. Even a slight warming trend will kill off a crop and this is happening in traditional rice-growing areas worldwide. Because of the unique growing conditions needed for rice (water paddies) you cannot simply replant at a more suitable location. Combined with exploding energy and fuel costs, this forces prices up. It is not a small matter- people will starve.

The climate is a closed system. Changes have wide-reaching and sometimes unpredictable affects. Starvation will be one of them and it could change geo-politics very rapidly as hungry people are angry people.

Opportunities for U.S. rice exports

Mar 24, 2010 9:44 AM, By Chris Bennett, Farm Press Editorial Staff

The current rice market is cramped, with more rice in projected carry-over than in previous years. “We are still in a very tight situation. We’re in a bubble and if there are any problems in any of the major rice-producing countries, things could change rapidly,” said Riceland Foods’ Carl Brothers.

“I think that will be one of the best U.S. sales all year — the previous one to Iraq. But this time the feeling is the Thais have woken up.”

• In addition to Iraq, Nigeria is a strong focus of the U.S. rice industry. During the 1980s, Nigeria was a strong importer of U.S. parboiled rice. With incessant political instability and a population of over 150 million, domestic rice demands march in tune with Nigeria’s economic pulse. Higher rice prices in Asia have factored heavily on Nigerian import decisions. “Nigeria has been a welcome return for us ... We lost that market to the Asians. With the Asian price run-up in recent months, they’ve returned to the U.S. and I hope we can catch them on our quality — seeing a difference — and we can take over the Nigerian market.”

• In Europe, the hurdles for U.S. rice continue to revolve around the GE controversy. Brothers says a reasonable tolerance policy is needed when testing for GE identification. With common conveyance and shared harvesting equipment (rice, corn, wheat and cotton fiber) the probability of positive GE readings remains high.

“These tests are so sensitive they are going to pick that up. So we need a low-level presence policy, which basically I would call it a tolerance. They don’t call it a tolerance — no GE being allowed in Europe — so they call it a low-level presence policy,” details Brothers.

A low-level presence policy would afford the U.S. valid latitude in accounting for traces of genetically engineered products. For U.S. rice producers, it would offer a variance from Europe’s zero tolerance of GE products — essentially interpreting zero as 0.1 or higher. “The first thing they’ve suggested they would do would be to find a technical answer ... What they’re suggesting is to further define zero as 0.1, 0.2, 0.3. If we could get that type of low-level presence, I think we would have a greater opportunity to get our product into the European Union. So we are going to keep pushing on that.”

• As for Cuba, diplomatic channels continue to clog. Despite rumors of agreements and relaxations, no benefit to U.S. rice growers appears imminent. “Cuba is slower moving than we’d like. There are several deals in Congress suggesting a relaxing of the situation, mostly about travel and payment. The Cubans got really irritated with us when we typed up the payment restrictions about a year and a half ago, and they haven’t bought anything from us since.

“They are just upset with us and our politics. We think the atmosphere is the best that it can be to see something happen with Cuba,” states Brothers.

• Regarding Brazil, Brothers says weather, similar to what U.S. growers dealt with last year, had a heavy impact on the 2009 Brazilian crop. He believes Brazil will curtail exports and hold rice for domestic consumption — a boon to U.S. traders. “They’ll empty out Argentina, Uruguay, and then lastly they’ll come to the United States for rice. If that were to happen, I’d expect it to happen in mid to late summer. That one is worth watching.”

Questions always linger in the global rice market, but U.S. growers have confidence in their product. Rice continues as a bellwether crop, unique in its relation to political climates. Brothers believes U.S. producers must be vigilant and continue moving forward. “No one stands still, and we’ve got to keep getting better; keep increasing our yields, lowering our costs, doing everything we can to stay competitive. The Asians are after our business and we’re going to have to fight as we go along. If we relax at any time, then I think we get run over.

“The numbers that I see from the rice industry look very promising for continuing

Pact wold keep rice prices steady, despite drought

Santo Domingo. – The Agriculture Ministry reached an agreement with producers via which the price of rice will not increase this year, although the drought may affect the second 2010 harvest.

Angel Hernandez, president of the Northeast rice farmers grouped in APRANO, said sector representatives, irrigation boards and Agriculture minister Salvador Jiménez signed the agreement, which stipulates that120 kilos will cost between RD$1,950 and $2,100 to produce, keeping the price of rice unchanged for consumers.

He said the country’s producers are committed to guaranteeing the Dominican population a low price for rice. “This rice sector continues being an important entity for the country’s economy and in this time of world crisis we’ve shown as in previous years more compliance with our role of being self-sufficient in national production, as we did when there were fears from the world’s food crisis.”

Hernandez however warned that if the drought affecting the country continues, the year’s second harvest may see affected, since water is vital to plant seedlings.

Adds trader’s comment in sixth paragraph.)

Rice Output May Drop in Thailand on Drought, FAO Says
By Supunnabul Suwannakij and Luzi Ann Javier

April 7 (Bloomberg) -- Rice production in Thailand and Vietnam, the two largest exporters, may be hurt by drier-than- normal weather that’s parched farms and cut water levels in the Mekong River, according to the Food and Agriculture Organization.

The Thai harvest that begins this month, which accounts for about 25 percent of annual output, may drop to 7 million metric tons from 8.4 million last year, said Concepcion Calpe, a senior economist at the United Nations’ agency. Output from Vietnam’s end-of-year harvest “may be affected,” Calpe said.

Drought linked to the El Nino weather pattern has affected a swathe of Asia from southern China into mainland Southeast Asia, prompting a warning from the Thai prime minister that rice prices may gain as output declines. Lower production of Asia’s most important staple may cut global stockpiles.

“For the time being, Thailand is the only country that shows a decline in rice production,” Calpe said yesterday in a phone interview. Still, “the decline will not have a dramatic impact on international trade as Thailand has lots of stocks.”

Rough-rice futures in Chicago, which have slumped about 12 percent this year, gained as much as 1.3 percent to $13.14 per 100 pounds today, rising after the FAO forecast to the highest level in almost a month. Thai weekly export prices, a benchmark for Asia, have fallen 14 percent this year to $510 a ton for 100 percent grade B rice.

The prospect of lower output “underpins the market,” Ben Barber, a futures adviser at Bell Commodities Ltd., said today from Sydney. The “lower supply provides a fundamental support to the price,” said Barber.

Coffee, Palm Oil

The dry weather may also hurt coffee output in Vietnam, officials and growers said last month, including Huynh Quoc Thich, the head of the cultivation office in Dak Lak’s agricultural department. Palm oil production in Malaysia, the second-largest grower, may drop between 2 and 3 percent on the El Nino, the Malaysian Estate Owners Association has said.

“I don’t really see prices dropping any further,” said Samarendu Mohanty, a senior economist at the International Rice Research Institute in the Philippines. The water shortage may limit the expansion in rice output and, as demand rises, that may push stockpiles lower and help support prices, Mohanty said.

Water levels in the Mekong, which flows from China through Myanmar, Laos, Thailand, Cambodia and Vietnam, are at the lowest level in 90 years, the Mekong River Commission said March 5. Thai rice production may drop and the price may jump because of dry weather, Thai Prime Minister Abhisit Vejjajiva said March 2.

Global Stockpiles

Global rice stockpiles may total 90.925 million tons this year, the U.S. Department of Agriculture said on March 10, paring its estimate from 92.497 million a month earlier. That compares with a global inventory of 91.219 million tons last year, and a record 146.714 million tons in the 2000-2001 season.

The level of global stockpiles is “still much lower than it used to be,” Mohanty from the rice institute said by phone yesterday. “If we have some problem with water supply, then that will affect the yield,” he said.

Rice stockpiles maintained by the Thai government are 5 million to 6 million tons, according to the Commerce Ministry. The authorities have said they plan to sell some to exporters and other countries, without giving a timeframe. The nation accounts for about a third of the global rice trade.

Officials have linked the drought to the El Nino weather phenomenon, characterized by warmer sea-surface temperatures in the eastern Pacific that can cut rains in Asia. Virapan Tipsuna, a farmer in Thailand’s northeastern province of Nongkhai, said last month it was “the driest period” he’d ever seen.

The drought may also affect the next season’s main rice crop in Thailand “unless there is rainfall by May or June,” said Calpe at the FAO. “What is more worrisome is the water in Mekong River affects more than one country.”

--Editor: Jake Lloyd-Smith

Last Updated on Monday, 12 April 2010 13:50  


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