7/31/2019 RT Vol. 10, No. 4 Hidden treasure

1/1

47Rice TodayOctober-December 2011

Hidden Treasure*

* The opinions expressed here are those o the author and do not necessarily reect the views o the International Rice Research Institute.

In my travels around the globe, it amazes me how the

human race is interconnected in so many ways and

how kindness manifests itself in varying forms in every

culture. Now that we are about to cross a momentous

barrier in human history of having 7 billion human souls on

our great planet, this interconnectedness will allow us to see

that more mouths need to be fed.

It is always eared that, with the bloating global

population, the human race would ace many problems that

would seem insurmountable. On a positive note, let us notorget that, with more people in the world, we also have

more intellectual assets available to provide solutions. We

are ar rom achieving an optimal world ood system, yet we

have done rather well in variety development as the success

at IRRI has shown. However, many areas are still let or

uture advancement o production.

What strikes me is that, at its core, many areas need

new varieties to increase yields, but, ater this occurs, they

must also have good postharvest techniques to protect

both quantity and quality in elds. When we travel outside

o cities to arming areas, a great divide exists in the systems

o developed and developing countries. In the more

developed countries, transportation systems are better

rom good usable roads, to trucks using those roads, to good

rail systems, to barge eciency, and even ocean loading.

Storage is another key issue. Many countries have yet to

develop sucient storage capacity, though you need roads

or barges rst or this to occur. Even the way rice is harvested

can be a signicant actor in getting more rom a eld.

The high prices seen in the major grain markets

together with rice-related developments such as the recent

Indonesian buying, Indias rice stocks, and Thailands return

to the rice pledging scheme are all key issues that ace theglobal rice market in the nal quarter o 2011. This Thai rice

pledging scheme will be implemented on 7 October 2011

and, with India on the brink o rejoining rice exports, price

becomes an issue in itsel, with Thailand instantly setting

minimum prices at US$650, then maybe up to $750 per ton,

while the Indian impact remains to be seen. With Thai rice

exports, which are between one-th and one-third o global

exports, you may see its power to negotiate a rise in price,

enough to set the direction o the global industry. India, on

the other hand, has

about 60 million tons o rice and wheat stocks. Although

these will get drawn down over the next ew months to

about 40 million tons, this amount remains huge, especially

with harvests also peaking during this period. Then, the idea

hit us that since the population is so large, the sheer size o

the Indian markets could make consumption levels dicult

to understand or predict.

Indias stock-to-use ratio (16 million metric tons o

stocks at year end) on wheat is about 1819% while rice isaround 24% (22 million metric tons o rice). The real question

is, What do you do i you have the correct amount o stocks

but insucient storage? In this respect, India could still have

a signicant impact on the direction o prices on the back o

such a massive release (2 million tons o rice and 1 million

tons o wheat as approved by the government o India). By

the time this issue comes out, more details will have become

clear.

We have long stated the ollowing act about this

market: the two worst things are prices that are too low

and too high. In the 1990s and in the early 2000s, we

experienced the efects o prices being too low, when

investment in agriculture was minimal. Also, we experienced

the opposite side in 2007-08, when prices reached the

point where demand was even afected, when rice became

unafordable to the poor.

The solution seems to lie with price, and a price that

would encourage investment in uture production, while

still remaining accessible to consumers (particularly the

poor), hence providing a solution to some o the problems

seen during recent years o high price volatility. Today, rice

is relatively cheap compared with the price o major ood

commodities such as wheat, corn (maize), and soybeans.This suggests that either production should dip or that

demand should shit to rice to rectiy what appears to be an

unbalanced market.

Jeremy Zwinger

Publisher

Interconnected solutions