TOPICS > Economy

Rising Food Prices Felt Around the World

April 11, 2008 at 6:30 PM EDT

INIGO GILMORE, ITN Correspondent: They’re taking no chances with this year’s harvest on the farms in Supamburri (ph). Alongside the heavy machinery, there’s a new feature: shotguns. The message is clear: Hands off my rice.

This is the heart of Thailand’s rice-growing region, and there’s great anticipation around this season’s crop harvest. With many countries facing shortages, this rice has never been more prized.

So prized, in fact, that for the first time this area has seen significant and organized thefts of the crop by outside gangs. That’s why local farmers are keeping a close watch on this harvest.

JAMLONG SUPAT, Thai Farmer (through translator): We’ve been farming here since the time of my ancestors, and nothing like this had ever happened. We never had to guard the land, but after the price of rice suddenly shot up, these rice thefts started happening.

INIGO GILMORE: The price of rice has exploded in Thailand, with the standard export rice shooting up 52 percent in just the past month, a windfall for some, but a worry for many.

VICHAI SRIPRASERT, President, Riceland International: This is like a tsunami to the rice industry. It come big, big waves. But actually you could observe it over the years, and you could see something was developing. But most people just did not pay attention to it.

Concerns over spreading crisis

INIGO GILMORE: Prices have surged alongside rising energy and production costs, the effects of climate change, and a squeeze on land for production. And they've spiked as African and Asian countries rushed to secure rice stocks amid fears of social unrest.

Over in India, a country where millions live a hand-to-mouth existence, concerns about securing those domestic stocks prompted the government to ban rice exports last week.

At this wholesale market on the edge of Mumbai, poor slum kids come to scavenge for a few precious spilled grains. The fear is that, if dwindling local stocks are not maintained, many more will have to turn to the begging bowl.

SHARADKUMAR MARU, President, Rice Merchants Association: Being an election year, the government is taking care that the prices should not go up. They are trying to see that the demand becomes lesser and the supply line is maintained. That is why they have banned the export of rice.

INIGO GILMORE: How would it affect people in India if the price of rice was to go up?

SHARADKUMAR MARU: If the prices go up, there will be hue and cry in India. The whole public will make a lot of noise, and there are chances, if the elections are there, the present government may fall down.

INIGO GILMORE: India is traditionally one of the largest exporters of rice in the world, and this new ban is causing alarm. The Indian government hopes it will stabilize the price of rice here, but the fear is it may push up prices elsewhere.

Signs are that's already happening. India's ban follows an export ban by another major exporter, Vietnam, and all this is putting pressure on Thailand, the world's only remaining major exporter.

The authorities are considering a cap on exports amid domestic concern over shortages. The country may boast bounteous reserves, but many wonder if stocks can match mounting international demand.

VICHAI SRIPRASERT: Most of the time, we can do about 700,000 to 800,000 tons a month, but we have been running at 1,000,000 tons pace, which is too much.

And right now I believe that in the next two, three months, our volume is going to drop drastically. Otherwise, Thailand will run out of rice, which we cannot allow that to happen.

Aid agencies struggle to help poor

INIGO GILMORE: This alarms international aid agencies already scrambling to provide for Asia's poor in an increasingly expensive, yet shrinking market.

In Cambodia at the weekend, hundreds took to the streets to protest over rice shortages. The World Food Programme says those shortages are forcing it to suspend a feeding program for 500,000 Cambodian schoolchildren. The organization has appealed for 80 million pounds in emergency funds, with particular concern for countries like Bangladesh.

PAUL RISELY, U.N. World Food Program: Bangladesh has recently suffered from a devastating cyclone that has wiped out at least 10 percent, maybe 20 percent of their overall rice crop. In addition, it has other natural disasters. It has a very large population.

INIGO GILMORE: The WFP, which previously relied on Indian rice, has turned for the first time to more expensive Thai rice exports to supply Bangladesh, but it's just a temporary reprieve.

PAUL RISELY: Countries that were exporting rice -- not only around Asia, but around the world -- are no longer able to do so. For the countries of South Asia, this present food crisis is a tipping point.

INIGO GILMORE: For millions of the poorest living in those countries, it's a tipping point over which they have no control, and a prolonged rice crisis could be devastating.