Global rice production to rise despite floods, UN body says

Nov 11, 2011, 6:50 GMT

Bangkok - Global rice production is set to rise 3 per cent this year despite widespread floods in South-East Asia, the Food and Agriculture Organization predicted Friday.

The FAO forecast that the global production of paddy, or unmilled rice, will reach 721 million tons in 2011, 2.4 million tons higher than it predicted in July, and 3 per cent up from 2010 production.

'The revision reflects expected improved rice harvests in Bangladesh, China, Egypt, India and Vietnam, which more than outweighed a worsening of prospects in Indonesia, the Republic of Korea, Madagascar, Myanmar, Pakistan, the Philippines and Thailand,' the FAO said.

The increase in Asia's main food staple is expected despite devastating floods in Cambodia, Laos, the Philippines, Thailand and Vietnam this monsoon season, that have claimed 996 lives and caused billion of dollars in damage to crops and property.

In Thailand, the world's largest rice exporter, the floods have already affected exports.

'I would say about 10 per cent of the shipments have been delayed,' said Chookiat Ophaswongse, honorary president of the Thai Rice Exporters Association.

He predicted that rice exports in November will drop to 500,000 to 600,000 tons compared with 850,000 tons in September. Total rice exports in 2011 are expected to reach 10.5 million tons.

Although the floods have damaged millions of tons of Thailand's rice crop, Chookiat was optimistic that farmers could plant more to make up the shortfall.

'Water will obviously not be a problem,' he said. Furthermore, the government has promised to buy all rice at 15,000 baht (500 dollars) a ton, far above the current market price.

'The price guarantee by the government should be an incentive for farmers to plant more,' Chookiat said.

The Thai government's populist price policy has already had an impact on global prices, the FAO noted.

'Between June and September, international rice export prices continued to manifest strength on most market segments, influenced by reports of flood-related crop losses and, especially, by the announced high price policy in Thailand,' the FAO said.

On an annual basis, international quotations over the January-to-October period averaged 13 per cent above its value in the same period in 2010.

The FAO said rice prices in the coming months would be highly uncertain. 'Policy developments, especially in Thailand and India, will continue to weigh heavily on the market,' the FAO said.

International rice trade in 2011 was set to reach 34.3 million tons, 9 per cent more than in 2010 and an all-time high, it said.

The UN agency predicted that the trade will decline in 2012 to 33.8 million tons.

As Thailand is expected to price itself out of the market next year, India and other rice exporters stand to benefit.

'As for 2012 exports, the drop would principally stem from lower deliveries by Thailand. Much of the shortfall in Thai deliveries is likely to be met by larger shipments from India,' the FAO said.