AppId is over the quota
AppId is over the quota
Hong Kong (CNN) – Care for some Japanese sushi, Spanish paella or Vietnamese pho for your next meal?
Or maybe just a steamy bowl of white rice to go with your Filipino adobo, Indian red curry or Indonesian beef rendang?
About one of every two people in the world relies on rice as a staple food, according to the Manila-based International Rice Research Institute.
So if the price of rice jumps, nearly half of the global population could be impacted.
HSBC noted Tuesday that the cost of the consumable commodity is rising – and will continue to do so.
Over the past six months, the global bank has found the price of rice has risen by 7.2%. In that same period, the price of another staple – wheat – has fallen 4% while the IMF’s World Food Index shows the average commodity price has dropped 2.2%.
So, what’s wrong with rice? It turns out Thailand, the world’s biggest rice exporter supplying one-third of global demand, is a primary cause.
New Thai Prime Minister Yingluck Shinawatra, just elected in July, is following through on a domestic campaign promise that’s pushing the international price of rice.
Her pledge: to buy the commodity from the country’s rural farmers – part of her electoral base – at a price as much as 40% above current market cost. That’s equal to about $500 per metric ton.
With the hope of a higher payout on the horizon – the policy takes effect October 7 – rice traders and consumers are starting to hoard, pushing the price higher too.
A secondary catalyst for rising rice prices is Japan.
The Fukushima nuclear disaster stemming from the March 11 quake and tsunami irradiated the land. An estimated 1.5 million tons of rice was lost. Japan, largely self-sufficient in past rice production, may soon scoop into the international market to compensate.
And with more expensive rice from Thailand and more demand from Japan, that could cause hoarding in other rice-producing countries.
We saw this in the spring of 2008, when the price of rice rocketed to more than $1000 per metric ton.
Vietnam, the world’s second-largest rice exporter, chose to restrict its exports to keep domestic prices low – instead of increasing exports to help boost global supply.
So, which countries are most sensitive to more expensive rice?
HSBC points to the Philippines, Malaysia and Indonesia as most susceptible to swoons. Rice is weighted more in those countries’ domestic consumer baskets than all other Asian countries. And with the Philippines in particular, rice makes up about 9% of that country’s basket – the highest percentage in all of Asia.
Looking ahead, HSBC says we shouldn’t expect to see the rice price spikes we saw in 2008.
But as of August, rice was trading at about $570 per metric ton. That’s a 17-month high, according to Index Mundi.
And the price of rice is expected to keep rising.
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