4 April, 2008 - A clampdown on exports of rice from Thailand to keep domestic prices under control is having ripple effects among Asian consumers of the Thai grain.
In Hong Kong, shoppers worried about rising prices are cleaning out shelves in supermarkets, while in the Philippines consumers are flocking to buy up rations of government-subsidized rice. Demand for rice from Thailand, the world's largest exporter of the grain, has soared amid a pest outbreak in Vietnam, the second-largest exporter. Meanwhile, government stockpiles around Asia are dwindling.
In Thailand, to prevent hoarding, some supermarkets are limiting the amount of rice individuals can buy, though there have been no signs of panic. But regional neighbors that rely heavily on Thai rice imports have been feeling the pain. Prices for a ton of medium-grade rice exported from Thailand have more than doubled since the beginning of the year, and a Thai government official recently predicted prices could rise higher still.
Rising food prices are leading to higher inflation and projections from China to Indonesia, where UBS is raising its inflation forecast to 7.4% for 2008 from 6.3%. "We point to food supply related inflationary pressures as a leading culprit in recent upward inflation surprises," UBS economist Chiou Yi Chang wrote in a research report Thursday. In recent days, however, prices appear to have fallen in Jakarta, Indonesia's capital, after spiking earlier in the year.
For the past two weeks in the Philippines, the state-owned rice distributor, the National Food Authority, has been selling heavily subsidized rice at its Manila headquarters. Officials say hundreds are turning up to buy rice from Vietnam and the U.S. that is rationed at four kilograms (8.8 pounds) per person per day. The Philippines is the world's biggest importer of rice and relies on supplies from Vietnam, Thailand and the U.S. to feed its 91 million people.
Taxi driver Gaudencio Parado complained that at his local market in the suburbs of Manila, prices have risen to 31 pesos (75 U.S. cents) a kilogram, from 23 pesos.
"My family is badly affected," said the 34-year-old father of three, who has traveled into the center of town to buy cheaper, subsidized rice. "One kilo of rice lasts my family two days, so to reduce our consumption we are also eating sweet potato."
Elive Dagdagan, 40, said rising prices are making it difficult to feed her 10 children. She needs to buy subsidized rice "or else we will have to start eating instant noodles."
In Hong Kong, supermarket chain Park 'N Shop hasn't raised prices on its rice products yet, "although we are facing much pressure," said Jeremy Lau, a spokesman. He said the company would try "to stabilize the retail price."
That didn't stop one man from hustling out to a local supermarket during lunch Thursday to haul off two bags of Golden Phoenix rice from Thailand. "These are for my boss," said the man, who identified himself as Mr. Wong. "They've run out of rice in his part of town, and he sent me out here to buy some more for his family." In Hong Kong, Thai fragrant rice accounts for some 90% of local consumption.
Earlier this week, a Hong Kong government official warned the public against hoarding rice. Even China's premier, Wen Jiabao, has felt compelled to speak on the subject. On Monday, he told people to "please set your mind at rest because China has abundant supply of rice," according to the state-owned China Daily. He added that China would guarantee ample supplies to Hong Kong and Macau.