FAO Predicts Easing of Rice Prices By Sabina Castelfranco
22 May 2008
The United Nations food agency says the high prices of rice may begin to come down amid predictions of excellent harvests this year. But the agency warns overall food prices will remain high. Sabina Castelfranco has this report for VOA from Rome.
The Food and Agriculture Organization, FAO, says rice market conditions could ease this year as new crops are harvested around the world. Experts say rice prices rose about 76 percent from December to April.
Economists at the Rome-based FAO say, the price pressure will remain high at least until October or November, when the bulk of this year's paddy crops will reach the market.
Abdolreza Abbassian presented the agency's food outlook report.
"The speculation, and it is a pure speculation, is that once the wheat prices begin to decline after the main harvest in the northern hemisphere and the summer, with the greatest likelihood, many countries which are fighting food inflation today will feel more comfortable to let the rice be exported," said Abdolreza Abbassian. "And should that happen the likelihood of rice prices coming down then increases."
Abbassian said the earthquake in China and the cyclone in Burma, while adding to the uncertainties about rice production, are likely to influence only domestic markets.
In its report, FAO said this year's cereal production is forecast to increase by 3.8 percent compared with last year, assuming favorable weather. Rice output is set to rise this year by 2.3 percent.
But despite the prospects for good harvests, the agency says rising demand, high fuel costs and the need to replenish stocks will prevent prices from collapsing or even falling to pre-2007 levels.
Hafez Ghanem, FAO's assistant director-general, said what the world needs now is to take some long-term measures.
"What we need to look at are ways of producing bio-fuels that have the least impact on food prices," said Hafez Ghanem. "At the same time we also need to look at our agricultural system around the world and see how we can improve productivity, increase production so that agriculture can actually meet the demand, this new demand."
Escalating food prices have triggered protests around the world in recent months. The United Nations has blamed a range of factors for that, including high oil prices, growing demand, bad trade policies, poor weather, panic buying and speculation.