Rice jumps as Africa joins race for supplies

Rice jumps as Africa joins race for supplies

By Javier Blas in Nairobi and Roel Landingin in Manila

Published: April 4 2008 15:23 | Last updated: April 4 2008 15:23

Rice prices rose more than 10 per cent on Friday to a fresh all-time high as African countries joined the rush of south-east Asian importers to secure supplies from the handful of exporters that continue to sell the grain in the international market.

The rise in prices – a 50 per cent jump in two weeks and more than double since January – threats to trigger social unrest in emerging countries, where the grain is a staple for more than 2.5bn people, analysts have warned.

Thai medium-quality rice, a global benchmark, was traded on Friday at about $880 a tonne, up from $760 a tonne last week, while the price of the less representative top-quality aromatic rice broke above the $1,000-a-tonne level for the first time ever, traders said. They added that the grain had been sold to African ports.

The jump came as leading exporting countries including Vietnam, India and Egypt banned foreign sales and demand remained strong. Farmers and middlemen hoarding stocks are also contributing to the crisis, governments said.

Traders and agriculture diplomats have warned that many West African countries, where rice is a staple, have yet to purchase the grain this year, leaving them vulnerable to pay record prices for supplies.

Toga McIntosh, Liberia’s minister of economic affairs, said earlier this week that rice was “always on the table” in his country. “We are very dependent of imports.”

Nigeria, the third world’s largest buyer of the grain, has yet to purchase rice in the international market this year, traders said. Senegal and Ivory Coast, which had suffered food-riots, are also among the world’s top-ten importers.

Some countries postponed their imports in January, when prices started to climb, in the hope that the increase was a short-term blip, traders added. But now they are rushing to secure supplies in spite of record prices.

Kenya, which also covers its rice need tapping the export market, has witnessed a rapid increase in prices. The retail cost of a 2kg bag of rice in Nairobi’s markets hit Ks50 (41p) this week, up about 40 per cent from a year earlier.

Rice importing countries are responding to the price surge slashing custom duties and reforming their purchase systems to secure the grain.

The Philippines, the world’s largest buyer of rice, said on Friday it was doubling the import quota allotted to private traders to 600,000 tonnes in a bid to boost rapidly dwindling rice stocks after the government failed to attract enough offers in the past three tenders.

The government, which has a virtual monopoly on rice imports, may bid the rights to import an initial 163,000 tonnes to private companies as soon as next week, ahead of the state food company’s own auction for 500,000 tonnes of on April 17, officials and private traders said.

Arthur Yap, the Philippine agriculture secretary, said also said that private rice importers will be allowed to make use of a special subsidy for state companies to offset import tariffs.

“We are opening it up to the private sector and one way to encourage them to import rice is to allow them to avail of the tax expenditure subsidy for the National Food Authority,” Mr Yap said at the end of food summit.