By Christopher Swann Bloomberg April 23, 2008
World Bank officials are concerned that pressure is growing in Thailand, the world's largest rice exporter, to restrict the nation's exports of the staple and worsen a global food crisis.
The Washington-based lender's unease stems from limits on shipments by India and Vietnam that have contributed to a surge in rice prices, said James Adams, vice president of the bank's East Asia and Pacific department.
Rice has more than doubled in the past year, putting pressure on Thailand to follow its Asian neighbors in curtailing exports. That would spur prices higher still because the nation accounts for about one-third of global rice exports, according to the U.S. Department of Agriculture. Thai retailers have already imposed limits on purchases.
``If a key exporter like this limits foreign sales, it would be very much like Saudi Arabia reducing oil exports,'' Adams said in an interview on April 21. ``The more countries impose export constraints, the stronger the pressures become for Thailand to do the same.''
The price of grade-B white rice, the benchmark export variety, reached a record $854 a ton on April 9, the most recent date for which prices are available. This compares with $327.25 a ton this time last year. Thailand exports almost twice the amount of rice as India, its nearest rival.
World's Kitchen
Thai Prime Minister Samak Sundaravej has denied any plans to restrict exports. ``There is no need'' to do so, Samak said at a press conference yesterday. ``Thailand will lose the name of kitchen of the world,'' if rice shipments were reduced, he added.
Adams said World Bank officials are hopeful Thailand will continue to resist pressures to curb exports.
``Thailand has been a responsible participant in this market and is benefiting from the high prices,'' Adams said. ``But the risk is real.''
Thai rice exporters have said foreign sales are already being hit by high prices. According to Chookiat Ophaswongse, president of the Thai Rice Exporters Association, the country's rice exports may fall by one-third by the end of the year as high prices erode demand.
Several food producers -- including Egypt, Vietnam and China -- have placed limits on exports in order to suppress domestic prices and placate urban consumers. The prices of corn, wheat and soybeans also have reached records this year.
Indonesia, the world's third-largest rice producer, will hold back surplus rice from export this year to bolster domestic stockpiles, President Susilo Bambang Yudhoyono said on April 18.
Domestic Pressures
Thailand's inflation was near a 20-month high in March, rising 5.3 percent from a year earlier from February's 5.4 percent pace. Thailand's Commerce Ministry aims to keep consumer price increases between 3 percent and 3.5 percent this year.
The World Bank has forecast that 33 nations from Mexico to Yemen may face social unrest because of higher food prices.
``Limiting exports is pure politics and bad economics since export controls destroy the incentive of farmers to plant more rice,'' Nobel laureate Gary Becker, an economist at the University of Chicago, said in an interview. ``But governments tend to favor the urban workers over the farmers, since urban groups are more politically active.''
Becker added that ``rice is perhaps the most politically explosive food since it is the staple of so many poor people in Asia,'' Becker said.
WTO Call
Japan's Agriculture Minister, Masatoshi Wakabayashi, has urged the World Trade Organization to set rules to discourage food exporters from limiting foreign sales.
Export restrictions are particularly threatening to large rice importers. The Philippines was the world's largest importer last year, followed by Nigeria and Indonesia. The Philippines received offers for only two-thirds of the grain it sought to buy on April 17.
A World Food Program official said the surge in prices may put basic foods beyond the reach of the poorest, raising the risk of a ``silent famine'' in Asia. ``There is food on the counters and on the shelves in stores but there is a certain population that cannot afford that food,'' Paul Risley, a spokesman for the United Nations agency, said in an interview on Bloomberg Television on April 21.
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