Concerns are increasing that rice – the staple food of half the world’s population – will soar in price. Julia Glotz looks at the facts behind the fear


It was meant to be the grain that got away with it. Over the past six to 12 months, the cost of wheat, maize, barley and oats has soared, but rice has remained largely untouched.

Not any longer. In early February, the cost of rice in Chicago hit $16.30 for 100lbs the highest it has been since the fourth quarter of 2008. Investor speculation often a sign that a commodity bubble is imminent has followed suit, with some experts claiming rice speculation is at its highest for 12 months.

This week, US-based financial ­research firm Peak Theories published a report outlining why it believed food prices were set to come down. Its one exception? Rice.

Other experts agree price hikes on rice are now firmly on the cards, and they will hit consumers in the developing world particularly hard.

Rice is arguably the world’s most important food staple. While UK consumers do not eat that much and when they do, it is mostly speciality varieties such as basmati and fragrant Thai rice it is the number-one food for more than half the world’s population, according to the International Rice Research Institute.

If rice prices were to follow the fate of wheat and other commodities, we could see a reprise of the 2008 world food crisis and accompanying riots, some experts fear. As analysts at the widely-read Zero Hedge investment blog put it: “The world will start getting visuals of what is happening in Egypt transposed a few thousand miles east, smack in the middle of Guangdong province.”

Paradoxically, despite fears about rice prices and supplies, global production levels for 2010/11 look healthy. Mintec analyst Robert Miles points out that the current global rice harvest is set to be the biggest ever, with 158 million hectares to be harvested.

But bumper crops will not necessarily stop rice prices from rising. Panic buying by governments worried about the potential unrest that high rice prices or shortages can bring may cause prices to increase even if actual supplies are ample.

Over the past few weeks, governments in the developing world, including those in Bangladesh and Indonesia, have taken steps to boost their rice imports and inventories, while in China where 1.3 billion people rely on rice as their staple the government has taken action to increase state subsidies for rice to boost local production.

Another potentially problematic factor is that rice competes with other grains and oilseeds for land, says Miles, and plentiful rice crops in one part of the world could prompt growers elsewhere to plant other, more profitable crops instead. In the US, the world’s third-biggest rice exporter, rice plantings are now at their lowest since 1989, increasing the prospect of a tighter supply and demand situation in 2011/12, and higher prices.

The impact on British consumers and the speciality rice they buy is likely to be reasonably small the retail price of 1kg of own-label basmati rice in the big four has stayed around the £1.50 mark for the past 12 months [BrandView.co.uk] but outside the industrial world, such changes could have dramatic consequences.

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