:. Food Industry News


Pressure Off Rice Market, but Problems Remain

Source: Reuters
16/03/2009

Manila, March 16 - Bulging global rice stocks and thin demand could save the world from a repeat of last year's food crisis that drove grain prices to record highs, but an industry expert warned on Monday against the risk of the global recession curbing investments in agricultural infrastructure.

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Robert Zeigler, director general at the International Rice Research Institute (IRRI), estimated that billions of dollars a year need to be invested in infrastructure such as new irrigation systems and new technology to boost yields in ricefields.

"I'm worried that we won't make the necessary investments and we're going to see continued pressure on the ability to meet global demand," said Zeigler, speaking in Manila as part of the Reuters Food and Agriculture Summit.

"We're certainly relieved that the pressure is off the market to some extent but let's not suffer under the illusion that the problems have been solved, because fundamentally, nothing's changed."  

Zeigler's institute had projected global consumption of rice, a staple for nearly half the world's population of 6.6 billion, to reach around 426 million tonnes in 2009, up 1 percent from the previous year.

Even before rice prices hit record levels last year as countries scrambled to secure their supplies, prices had been rising steadily since 2001.

"That represents a structural problem and until we get that turned around, we're going to see a steady upward pressure on prices," said Zeigler.

This year, the Philippines, the world's biggest importer of the grain, secured a 1.5-million-tonne deal with Vietnam that will fill most of its needs, and hopes for India to lift its export ban after elections in April and May have helped usher stability into the market following last year's volatility.

For a graphic showing the world's top rice importers and exporters, click: here

RICE VARIETIES

The Philippines-based institute, which breeds high-yielding strains of rice to meet growing demand, kickstarted the Green Revolution in the 1960s that swelled harvests of Asia's food staple and helped nations such as Thailand and China to industrialise.

At the moment, IRRI is developing several rice varieties to can keep up with the changing climate. After releasing flood-tolerant rice in South Asia, it is working on several varieties that can withstand heat, saltwater and even drought.

"Drought-tolerant may be the toughest one to hit, but we're definitely making progress," Zeigler said.

"We have a variety that was released in India this year which will enable us to grow rice with less water so we can use intermittent irrigation rather than continuous flooding."

Some rice-producing nations, though, are still reluctant to use genetically modified (GM) seeds, citing safety concerns.

But Zeigler said "diehard opponents" of GM foods were the least of his worries. "What we worry about is making sure that we produce a safe and healthy product that will benefit the poor."

IRRI is in the final stages of testing and evaluation for its own Vitamin A-enriched GM Golden Rice, which it hopes to make available to farmers by 2011 or 2012, he said.

But the first gene-modified rice grown commercially would probably be in China or India, with China in the final stages of evaluation of an insect-resistant seed and India in a late phase of development of a similar variety.

With the rice market much calmer now, Zeigler, who found himself hounded by journalists last year seeking explanations of the surge in prices, can now make time for scuba diving.

"I am going to the beach this weekend," he said. "My wife told me."



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