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Last Updated: Monday, 4 February 2008, 00:51 GMT
Thais hold key to rice shortages
Paddy fields in Suphan Buri

By Jonathan Head
South East Asia correspondent, BBC News

If there is such a thing as the world's rice-bowl, it lies in the steamy, flat land surrounding the lower reaches of the mighty Chao Phraya river, which ends its journey to the sea in Thailand's capital, Bangkok.

About 150km (93 miles) north of Bangkok is the province of Suphan Buri, home to Thailand's most productive rice paddies. And Thailand has for many years been the world's largest exporter of rice.

Enriched by the alluvial soil washed down by the river, this land can produce up to four harvests a year.

In one sweeping vista you can watch barefoot farmers scattering seeds into the grey-brown mud, see fields of vibrant-green young shoots, and watch other farmers harvesting the mellow gold rice that has already ripened.

It is backbreaking work, and an unpredictable living.

A few years ago many of the farmers were weighed down by debt. But not this year. Rice prices shot up by 50% last year, and they are still rising.

According to the UN Food and Agriculture Organization's index of food prices, they have reached their highest levels in 20 years.

"It's been unexpectedly good for us over the past year", said 76-year-old Sawan Katawut, who is head of the Suphan Buri Farmers Association.

"Maybe it's because of natural disasters in other countries, or problems with rice prices there - but it has been a windfall for us."

Vital commodity

At the regional headquarters of the UN World Food Programme (WFP) they are monitoring the sharply rising food prices with growing alarm.

"For millions of people across Asia this is a real crisis", says Tony Banbury, the WFP's Regional Director for Asia.

"Imagine if you're a family of four, getting by on a dollar a day, and spending 70% of that on food, and all of a sudden prices are doubling - you can't possibly get by."

Rice is an unusual commodity. A staple for two-thirds of the world's population, most is consumed locally.

Rice trader Supoj Vongjirattikarn
We have plenty of rice, just as our main competitors Vietnam and India don't have enough for export
Supoj Vongjirattikarn
Rice trader

Just 7% is traded on the international market - but that 7% is vital for countries like Bangladesh and Afghanistan that rely heavily on imports.

It is also a very political commodity, because it is so intricately linked to a sense of security and prosperity for many societies in Asia.

The price of rice is watched very closely by governments.

Even Japan, among the world's richest and most industrialised societies, maintains a huge rice stockpile - although it is impossible to imagine a scenario in which the wealthy Japanese could not buy it on the international market.

So as prices have risen governments that normally export rice have stopped, to try to maintain stocks at home.

Over the past year, India and Vietnam, the world's second and third largest exporters, have blocked exports, as has China, the world's biggest rice consumer, but an important supplier for perennially hungry North Korea.

We don't like it when the price moves too fast
Chookiat Ophswongse
Thai Rice Exporters Association

Suddenly everyone wants Thai rice - and Thailand always produces more than it needs.

Unlike poorer rice-producing countries, where consumption of rice rises as incomes go up, Thailand's people have reached an income level where rice consumption is declining, as they eat a greater variety of foods.

In a dingy little office, tucked out of sight down a small alley in Bangkok's Chinatown, Supoj Vongjirattikarn wields a telephone in each hand, speaking rapidly and flicking his abacus with his fingers.

He is one of around 70 rice brokers in Bangkok who literally keep the international rice lifeline going - matching orders from abroad with suppliers, the thousands of rice mills in Thailand that take and process the farmers' harvest. And he has never been busier.

"Thailand is lucky," he said between phone calls.

"We have plenty of rice, just as our main competitors Vietnam and India don't have enough for export."

Nightmare scenario

The reasons for the soaring rice prices are complex. Chookiat Ophaswongse, at the Thai Rice Exporters Association, says demand is rising fast in new markets like Africa, but production is falling, as farmers elsewhere have turned to more profitable crops like bio-fuels.

Rice, he says, is merely tracking the price boom in other commodities, and he expects prices to continue rising. For the first time in recent history, global demand will exceed global supply.

Rice farmers planting seeds
Unlike much of Asia, Thailand has no shortage of rice

For the WFP this is a nightmare. Already it is being asked for extra food assistance from Afghanistan and Bangladesh as their populations struggle to pay for dwindling stocks of rice.

It is very worried about the impact of prices on North Korea and East Timor - both vulnerable to food shortages.

Yet because of rising prices, it cannot afford to buy as much on the international market as in previous years.

"We're especially concerned about urban populations, populations that we used not to help", says Tony Banbury.

"People like casual labourers who don't have a coping mechanism for these prices, who can't grow any food of their own."

So are Thailand's rice producers laughing all the way to the bank? Actually, they are not.

"We don't like it when the price moves too fast," says Chookiat Ophswongse.

"As exporters we can get caught out. It is much easier for us to handle rice prices when they are more stable."

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