A Long-term Solution is Needed
The rice shortage in various Asian Countries at the moment is considered a silent tsunami affecting all people especially the poor. The recent cyclone in Burma and earthquake in China worsened the already dreadful situation. Rice is the lifeblood of almost all people across Asia and its prolonged shortage could make more than 2 billion people hungry.
The average price per kilo of rice in the Philippines increased from Php22 a year ago to about Php40 today or almost a 100% increase. This does not include inflated prices in very remote areas where additional transport costs are added. This escalating price is even worse in other countries where rice shortages are resulting in violent riots.
The law of demand in Economics tells us that the higher the price of a product the lesser would be the quantity demanded. However, consumers are not able to change their demand for rice since it is their staple food and often there is no close alternative substitute. Even if there is an available substitute, the prices are also high!
I have gathered the following main possible causes of rice shortage and skyrocketing rice prices in the world based on my reasoning as well as readings from various articles.
- Population growth increasing rice consumption which is outpacing production;
- Plant diseases that hurt harvests;
- People hoarding rice supplies in anticipation of higher prices;
- Drought in the largest rice-producing and exporting countries (e.g. Australia suffered 6 years straight of drought. Australia was once among the largest rice exporting countries that supplied rice to millions of people around the world;
- Increases in the price of oil which increases the cost of producing rice which eventually leads to lower production and higher cost;
- The drive for renewable energies such as biofuel which converts food into fuel (e.g. In the Philippines they have started using sugarcane as an additive to petrol. This additive is known as ethanol). Although no one has used rice yet as biofuel, corn, as a close substitute for rice, has been widely used as biofuel, thus increasing the price of corn;
- The conversion of ricefields into other uses like housing development and golf courses.
In the Philippines and in other Asian countries, the government is subsidising the rice supply to keep the price of rice at least affordable to poor people. However, this solution is just temporary as the government cannot afford to do this for long.
I have thought of only two possible long-term solutions. Can you think of some more?
- People should learn to shift to cheaper alternative substitute food like sweet potato;
- Governments should invest more on infrastructure, technology and research on genetically modified rice and higher yielding varieties that could increase rice harvests.
The second one is the most lasting solution but developing countries may not be able to finance this. A well planned project and reliable courses of action are needed to attract the confidence of foreign capital providers. Another challenge is the project implementation which maybe affected mostly by unstable political situation in Asian countries where corrupt government officials may intervene and embezzle the funds!
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Tags: rice
Thankyou for bringing attention to this serious problem Wilson. Often in western countries we forget about the plight of those less fortunate than us.
In particular, I think your point on the use of Corn for biofuel is very pertinent. Governments around the world need to think hard about the consequences of their environmental policies before they make drastic changes in the face of so called global warming.
Developed countries may be able to accept a doubling in the price of fuel and other carbon emitting products, but to impose this cost upon developing nations could lead to starvation for hundreds of millions.
Is it right to cause these deaths when we are not completely sure global warming exists? All 4 major worldwide temperature monitors showed a decrease in 2007.
Western Countries have the luxury to debate these issues, and assuage their guilt by buying hybrid cars and paying more for green power and organic gm free foods. Is it fair to impose this upon struggling poorer nations?
We should be spending money to help to develop better yielding crops to help feed the worlds starving children.
This would be the best use of our comparative riches.
i am just so sad, the world is so unfair to me, i have to pay so much more for my dinner like an extra $2 which adds up to $104 a year. With the rising cost of petrol as well i have to walk everywhere now and that increases the pain in my legs. aaiieee!!
I agree about the Global Warming issue at the moment that’s receiving a lot of attentions.
Western countries should shift their focus first on more urgent and important issues like this rice shortage that’s affecting a lot of people. They should also consider the impact of the push for biofuel energy which is indirectly affecting the price of rice.
..Ei Wilson, thanks for bringing this issue on your beautiful website.
Do you know what? I feel the pain of a very expensive rice here in the Philippines. You should send me Australian dollars! I heard you have a lot of dollars already. lol,
Now I have to cut down my shopping expenses because rice is so expensive. You should introduce me to your Australian friend now so that I will have dollars too!!
There is no doubt that soaring food prices are causing significant problems for people all around the world. This is not only a problem in the Philippines, but also in India and other third world countries.
Speculation and increased consumption of meat/dairy products by China, India and other nations is a factor in the food prices.
Recently world leaders met at a U.N. summit in Rome. The main outcomes of this summit were to reduce trade barriers and boost agricultural production. A number of countries announced firm financial aid. The money will benefit countries hard hit by the current world food crisis, allowing them to grow enough food for themselves in the coming planting seasons, and helping them to achieve continuing food security through investment in agriculture and research.
But it remains to be seen if the words and promises made will translate into changed trade policies around the world.
I think biofuels presents both challenges and opportunities in using food for fuel. As Roderick pointed out, governments do need to think hard about the consequences of their environmental policies and find the right balance.
Check out: http://www.fao.org/newsroom/en/news/2008/1000858/index.html
Thanks Nigel for the information about the Food Security Summit. I am not aware of this one.
Hopefully, the financing committed by various governments and states will go to the countries that are really in need and have the capability of putting the money into a productive use.
Hi Myrna - I know some other friends in the Philippines as well who have same situation as you who feel the pain of too expensive food at the moment. It’s very sad. Let’s just hope that the situation will not become worse.
By the way, the rich Australian friend that I’m suppose to introduce to you is no longer rich now because he spent all his money buying Prada sunglasses and Zegna belts! He may not be able to afford to buy a sack of rice anymore!
I do not really agree with your first stated long term solution as to shift to cheaper alternative since that is still “alternative”. To seek for long term solution we have to find the root-root cause of that problem and then come up with definite solution, on that we can address the problem properly.
Our country Philippines have a vast knowledge in production of rice and we got several type of rice variety, and I think so we got a lot of research and know-how, the problem is information, and study-results are not been properly disseminated to people whose livelihood is farming and to other people who wish to continue to cultivate thier land but for so many many reason they cannot.
The first alternative may not be possible at the moment because people would normally resist to changes.
I’ve heard in some countries in africa that their staple food is banana which is easier to grow and very resistant to temperature. They can be grown in the backyard, in the hill, in wet and dry environment.