Bumper rice harvest could bring down consumer prices

The 2008 rice bumper harvest is coming to a close with better-than-expected production that could help ease consumer prices, FAO said in its February Rice Market Monitor.

But the agency warned that the global economic slowdown could outweigh the gains for the poorest of the world’s rice consumers, because of falling incomes and rising job insecurity.

FAO currently predicts global paddy production in the 2008 season to rise to 683 million tonnes, 3.5 percent more than in 2007 and the fastest rate of growth for three years.

The increase will be due to a 2.2 percent increase in the amount of land cultivated globally as farmers and governments reacted to the high prices.

The global 2008 rice harvest ends in Asian northern hemisphere countries around May.

Rapid increases in the price of rice the staple food for around two and a half billion people - and other cereals played a major role in the food price shocks last year, characterised by high fuel and fertilizer prices that triggered political unrest in many countries.

Global rice prices for 2008 ended the year on average 80 percent higher than in 2007 despite the steady decline since their peak levels in May, FAO said.

The price of a tonne of the benchmark Thai white 100 percent second grade was $611 in January compared to $385 in the same month in 2008 having risen to a peak of $963.

“One positive effect of the high rice prices in 2008 was that farmers and governments took up the challenges and opportunities and planted more, boosting production despite high fuel and fertilizer costs and a scarcity of quality seed,” said FAO Senior Economist Concepcion Calpe.

Favourable weather in many parts of the world also helped to sustain yields in the face of high fuel and fertilizer prices.