Rice Prices To Keep Rising Despite Record-High Production

Rome, Italy (AHN) - Rice production in Asia, Africa and Latin America will reach record highs in this year, but prices could also continue to soar in the short term, the United Nations food agency said.

The Food and Agriculture Organization (FAO) forecasts show harvests surging by 2.3 per cent and reaching an all-time high of over 600 million tons, but prices will remain high in the immediate future because a large portion of this year's crop will only be harvested at the end of 2008.

However, FAO warned that the destruction of the Burmese food basket by the devastating Cyclone Nargis which struck the South-East Asian nation last week could lead to a worsening of the global rice production outlook, a U.N. statement said.

The cyclone - which flooded rice-growing areas and destroyed several warehouses and stocks - hit Burma, officially known as Myanmar, as paddy farmers were harvesting their dry season crops, which accounts for 20 percent of annual rice production.

Rice prices in Rangoon have skyrocketed by 50 percent, and if the country turns to neighboring countries such as Thailand and Viet Nam for imports, this could lead to further upwards pressure on global prices, the statement noted.

International prices soared by 76 percent between December 2007 and April 2008, according to the FAO Rice Price Index.

The rising price of fertilizer, pesticides and fuel are also contributing to the soaring prices, and favorable weather conditions are needed for them to fall from their current levels, the U.N. food agency said.

Average rice consumption worldwide is predicted to rise by 0.5 percent to 57.3 kilos per year, and despite the rising prices, consumers have been seen to shift away from more expensive foods, such as meat and meat products.