Manila, Jan 9 - Rice prices, which have fallen sharply from record highs last year, could rise in coming months as tight credit and dwindling grain prices push farmers to plant less, a research group said on Friday.
Benchmark Thai rice stood at around $550 per tonne this week, sharply down from the record $1,080 struck in April 2008. Demand was thin and the market largely inactive after the year-end holidays.
But the Philippines-based International Rice Research Institute (IRRI) says prices could soon take a sustained upward trend.
"Production uncertainty due to tight credit and declining rice prices, combined with strong demand growth, points to another rise in rice prices in coming months," the institute said in the latest issue of its quarterly publication, Rice Today, released on Friday.
"Price volatility will remain high."
The Philippines, the world's biggest importer last year, has cut its 2009 rice production estimate by almost 4 percent as farmers struggle for loans to buy farm inputs, IRRI said, adding that other rice-producing nations may follow in the near term.
And the global credit crunch is likely to further tighten funding for infrastructure improvements and research and development activities, it said.
"Making matters worse, the economic slowdown may increase the demand for rice in developing countries as falling income forces poor people to switch back to less expensive staples," the IRRI said in an article titled "Rice and the Global Financial Crisis."
Already, the price of Thailand's 100 percent B grade white rice rose this week for the first time in more than a month, to $550 a tonne from $520 at the end of December, on fresh demand for parboiled rice from African countries. [ID:nBKK156055]
The institute had projected global consumption of rice, a staple for nearly half of the world's population of 6.6 billion, to reach around 426 million tonnes in 2009, up 1 percent from the previous year.
While the world has produced a record rice crop in each of the last four years, IRRI said the increase came mostly from area expansion instead of growth in yield.
"If the yield growth rate does not improve, we can expect rice prices to continue to rise, and at a faster pace than that seen since prices started moving up in 2000."