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Outline
Current Situation
Are we headed for another food crisis?
Why price spikes are more frequent and prices are more volatile now? What can be done to lower volatility? Some closing remarks
650 600 550 500 450 400 Dec-09 Jan-10 Feb-10 Mar-10 Apr-10 May- Jun-10 10
Vietnam China
000 MT
300000 90/91 91/92 92/93 93/94 94/95 95/96 96/97 97/98 98/99 99/00 00/01 01/02 02/03 03/04 04/05 05/06 06/07 07/08 08/09 09/10 10/11
340000
380000
420000
460000
500000
Percent
10
15
20
25
30
35
40
0 90/91 91/92 92/93 93/94 94/95 95/96 96/97 97/98 98/99 99/00 Rice 00/01 01/02 02/03 03/04 04/05 05/06 06/07 07/08 08/09 09/10 10/11 Barley Wheat Corn
700,000 650,000 600,000 550,000 500,000 450,000 400,000 350,000 300,000 250,000 200,000 90/91 91/92 92/93 93/94 94/95 95/96 96/97 97/98 98/99 99/00 00/01 01/02 02/03 03/04 04/05 05/06 06/07 07/08 08/09 09/10 10/11
Rice
Wheat
6000
39%
5000 4000
3000
20%
2000 1000
6%
0 99/00 00/01 01/02 02/03 03/04 04/05 05/06 06/07 07/08 08/09 09/10 10/11
Production
Consumption
US Dollar Index
Source: Stockcharts.com
Demand Quantity
Trade Restrictions
Export ban; Import controls Export quota; Import TRQ Export ban on nonbasmati and minimum export price for basmati; Import controls Export control; Import ban Restricts imports to MMA quantity Restricts imports to MMA quantity Restricts imports to MMA quantity Imports by state agency alone. Export tax quantitative restriction on imports
Rice
$ per Ton
Fertilizers
Greater variability in input and output prices negatively affect crop yields.
Organized retailing
Will bring greater efficiency in the supply chain Lower spread between farm gate and retail prices Link producer and consumer prices more closely.
60%
40%
20%
0% 70/71 73/74 76/77 79/80 82/83 85/86 88/89 91/92 94/95 97/98 00/01 03/04 06/07
United States
Brazil
Argentina
50,000
Domestic consumption
40,000
Imports
30,000
20,000
10,000
70/71
74/75
78/79
82/83
86/87
90/91
94/95
98/99
02/03
06/07
Thai 5%
0
Viet 5% Thai 5% Parboiled Thai 100%
Closing Remarks
In my book, we are already in crisis. Given lower buffer stocks+ nexus between food and fuel, expect greater price volatility and frequent spikes in the future.
Thin global market+ excessive trade distortions make rice price even more susceptible to supply and demand shocks