For Want of a Better Title

The article from the Economist is at the bottom.

As I guessed when I first read the news, the biggest problem with our rising rice prices is that it’s more a distribution error than a problem with the rice yields. It’s more about politics than it is about agriculture. Also a rise in prices is expected, it’s been dropping for years. Did anyone really think rice would eventually become free? What goes down must come up. It does suck though because rice is a necessity in Southeast, East and South Asian diets. It also suck that wheat prices are going up. That would make flour more expensive, and so bread and noodles more expensive. That leaves potatoes, the other staple carbohydrate. More fries anyone?

What’s probably going to happen though is an even higher rise in rice prices. The thing about a necessary product is that when price goes up, people buy more. And since they’re spending more on rice, they’ll spend less on the things that accompany that rice. Think about it this way. The rice is a nearly inelastic good for many consumers here. So you’re still going to buy, in fact you’ll buy more, because you need it. Which means you cut down on the complementary goods. Like fish, meats, vegetables, condiments, all the little side dishes. That’s because now rice takes up a 10% or 20% of your food budget instead of 5% (assuming rice prices double or quadruple). Since rice is necessary, the less necessary stuff will get dropped out of the list. That could mean bad news for meat, fish and vegetable producers.

Personally though, I think I’m not too worried. Potato is a perfectly good substitute for rice. That’s just for me though. I like potato products. I especially love potatoes in chicken curry. It’s not the chicken I love, it’s the potatoes.

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Taken from the Economist

Needed: a new revolution
Mar 27th 2008 | BANGKOK
From The Economist print edition

How bad policies crimp exporters

THE soaring price of rice and dwindling stockpiles of Asia’s basic food are causing anxiety across the region. In particular the Philippines, a big, hungry country which cannot grow enough to feed itself, could be in trouble. The front pages of Manila’s newspapers scream about a “rice crisis”, as politicians float drastic solutions, such as forcing the country’s 100 leading firms to take up rice farming. Farmers in Thailand, the world’s largest rice exporter, are delighted with the price surge, although some were said this week to be organising patrols to protect their crops.

The president of the Philippines, Gloria Macapagal Arroyo, last month pleaded with Vietnam, the second-largest exporter, to guarantee supplies. The two countries signed an agreement on March 26th, apparently to do just that. But the various escape clauses that Vietnam secured suggest it was more of a face-saving measure than a firm pledge. Vietnam and India, another big rice exporter, have recently announced export restrictions to try to curb soaring food prices at home. This will make it tough for poor, rice-importing countries, in Africa as well as Asia, to secure supplies.

Until a few years ago, rising harvests satisfied the growth in rice demand caused by population growth and Asia’s success in cutting poverty. But recent wobbles in output have reversed a long-term trend of falling prices. They have also left global stockpiles at their lowest since the 1970s.

Political consequences may follow. Mrs Arroyo came to office in a “people-power” revolt in 2001 and her grip on office is tenuous. Hunger could be the excuse the opposition needs to bring Filipinos to the streets. So Mrs Arroyo is straining to be seen doing something about food: posing for photos at grain warehouses and pledging to crack down on the fiddling of subsidised rice supplies.

Indonesia’s president, Susilo Bambang Yudhoyono, had hitherto been expected to sail to re-election next year. But costly food and rising poverty may endanger him. That Mr Yudhoyono made a show of completing a doctorate in agricultural economics during his 2004 election campaign only increases his potential for embarrassment. He has tinkered with, not abolished, Indonesia’s absurd restrictions on rice imports. These, like the Philippines’ rice import tariffs, were intended to protect poor rice farmers when prices were low, but they hurt poor rice eaters, a larger group.

This week a senior Indonesian official said the country had reached its goal of becoming self-sufficient in rice. Mr Yudhoyono later contradicted this, by saying Indonesia would need to continue importing Thai rice for now. Even if Indonesia attains self-sufficiency soon, it will be hard to maintain. The Philippines became self-sufficient in the 1980s, only to relapse into deficit, despite an expansion in its paddies.

Nature affects countries’ ability to grow rice—but so does governance. An extreme case is Myanmar. Once it was the world’s biggest rice exporter, and it still produces a small surplus. Yet many of its people go hungry, thanks to a crude, cruel regime.

Robert Zeigler of the International Rice Research Institute—a driver of Asia’s “green revolution” in the 1960s—says governments are now paying for years of neglecting agricultural research and irrigation. They have lost prime land and water supplies in the rush to industrialise.

Simply reducing disparities in productivity, even between identical fields in a given district, could solve Asia’s rice worries for decades to come. That would require, for instance, ensuring farmers can buy higher-quality seeds, which in turn would require more funding from governments for old-fashioned things such as cross-breeding existing strains of rice.

A report this week from the UN’s economic commission for Asia said a boost in farm productivity could lift more than 200m Asians, a third of the region’s poor, out of poverty. Asia’s masters may need a new green revolution, if they want to avoid upheavals of a bloodier hue.

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