Is the Rice Shortage Real?
Prices are spiking, but warnings of a shortage may be overblown. However, that won't stop politicians and ideologues from using the supposed crisis for all it's worth.
Entire civilizations have been built on the stuff, but now it seems the world is running out of rice. Or is it? A year ago, the world had plenty of rice. Mothers hadn’t told children to clean their plates “because kids in China are starving” for almost 30 years. USA Today quotes economist Nathan Childs saying that U.S. production is “strong”:
The global crop is larger than ever, Childs said. But with some of the principal exporters of the higher-priced rices, such as India and Vietnam, shunning foreign sales to control prices at home and the cost of food generally going up, the price of rice has been climbing to new heights. What adds to the price spike — and the run on specialty products like basmati — is that rice consumers tend to be very loyal. The market is highly segmented by type of rice and quality, and buyers will generally not take a substitute, Childs said.
If people are still being picky, then by definition there’s no real shortage. Beggars can’t be choosers, after all. But that doesn’t mean prices aren’t spiking. So what’s really going on here? Something called “The Dissident Voice” claims that “unregulated greed unleashed over thirty years of neoliberalism” is to blame for the spike, adding that “Wall Street millionaires” would “let them eat ethanol.” That fact that ethanol is a creation of government subsidies, rather than of free markets, never seems to occur to The Dissident Voice. So I think we can safely dismiss kooky lefty conspiracy theories. Still, some folks blame ethanol. The Asian Development Bank said Monday that “developed nations should stop paying agricultural subsidies to encourage biofuel production because the payments are making staple foods more expensive.” I’m no fan of ethanol, or of government subsidies for that matter, but it seems premature to blame crop-switching before rice production has actually declined.
However, it is fair to complain that farmers might be planting extra — and extra profitable — rice fields, if Washington weren’t bribing them into growing corn to put in gas tanks instead of bellies. It’s with a straight face, and without complaint, that The Daily Green (no relation) reports:
Brazil announced yesterday that it would temporarily halt rice exports to ensure domestic supply as global prices rise, following on the heels of several Asian nations that have done the same.
The best way to alleviate a shortage is to take stuff from where there’s extra, and send it someplace else that doesn’t have quite as much. Usually, this is done in exchange for currency. We call this process trade, and it works best when people can do it freely. And so how are governments responding to the rice “shortage”? By restricting trade — keeping their extras and denying it to those without. It gets worse. Even though “adequate rainfall and sunshine have boosted yields” in India, the government still won’t allow any exports. Jimmy Carter tried something similar with gasoline — mandating that all stations stay filled up, even rural ones where demand was low — resulting in long lines in high-demand urban areas. CommodityOnline’s Gary Dorsch says it’s not just rice, noting that “soybeans are up 83%, corn up 65%, wheat up 95%, sugar up 30%, coffee up 25%, gold up 36%, and rough rice is 125% higher from a year ago.” And the dollar is down to record lows against — well, pretty much everything. The Fed has destroyed the dollar’s international purchasing power, with the connivance of an eternally overspending Congress. And we’re shocked, shocked when a weaker dollar means higher prices?
Let me rephrase — are we seeing a pattern here? Australia suffered a drought last year, curtailing production of thirsty, thirsty rice. Traders responded by driving up prices, and governments responded by enacting policies to restrict the very trade which could, and eventually would, drive prices back down. And what happens when people or their governments hoard stuff? Prices are driven up even further.
But the real proof is in the rice pudding. Is the rice shortage real? It sure is, if only just barely; demand is expected to outstrip supply this year by less than 1%. But like most shortages, this one is being exacerbated by politicians ignoring the most fundamental of all laws — the one of unintended consequences.
Stephen Green blogs at Vodkapundit.
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24 Comments
1. Adiós, paella, adiós -- El Blog de Manuel Delgado:[...] Stephen Green trata en Pajamas Media el asunto de la supuesta escasez de arroz. Hay mucho que analizar sobre este tema, pero parece que el intervencionismo estatal es uno de los factores importantes en esta “crisis“, como en tantas otras cosas. [...]
Apr 26, 2008 - 3:08 am 2. Andrew Ian Dodge:Well if there is a truly a rice crisis it might cull the amount of Indian restaurants about in London. They stink up the place, literally, and a few less will do the smell of London a world of good.
Apr 26, 2008 - 3:40 am 3. HankS:I would like to know, how many thousands are being fed by the msm just right now with their malthusian crap, for every person who knows anything about this:
http://en.wikipedia.org/wiki/Green_revolution
Or this:
http://www.irri.org/science/ricestat/index.asp
(on the pdfs of that page)
Global production of rice in 1961:
215,6 million tons
Global production of rice in 2006:
631,4 million tons
http://online.wsj.com/article/SB118556810848880619.html
“The price of rice dropped to a low of less than $200 a ton in 2001 from more than $550 a ton in the 1970s”
Apr 26, 2008 - 7:36 am 4. Bill Bradley:Well, here is a reality check.
I have been paying more than $4 a gallon for gas for weeks, and the price of oil hit $120 a barrel on Friday.
Meanwhile, the big wholesale outlets around here are rationing rice.
Apr 26, 2008 - 12:52 pm 5. Howard Veit:Long time commodity trader: an imbalance of 1% is huge in commodities where prices are based on carryover as well as current yields. In other words an imbalance of 1% on 600 million tons (world rice yields)is more rice than any human being has ever seen: six million tons. So when six million tons vanishes the markets are affected.
Apr 26, 2008 - 1:50 pm 6. amr:“adding that “Wall Street millionaires” would “let them eat ethanol.”
Well, yes, kinda, sorta. The residue from alcohol production for ethanol is a protein rich residue used locally in Iowa and other places to feed cattle (http://www.npr.org/templates/story/story.php?storyId=87782087- will not come up now so search under corn residue for the story – Fuel, Food Demand Raise Corn, Soybean Prices) and could be used to feed people. Alcohol production takes the carbohydrates from the corn leaving the protein. It appears the corn field to feed yard transportation path is broken. That is the unintended consequence of rushing into a government subsidized program to feed cars by redirecting raw corn from the cattle. And who wants our corn, rice, soybeans and other crops anyway since much is genetically modified and the EU frowns on that innovation. Some African countries, following the EU lead, have been willing to let people starve rather than take our corn.
Just like the new ice age and mass starvation prophecies from the 1970s, we’ll get over it after the system rights itself.
Apr 26, 2008 - 2:21 pm 7. Bill Bradley:The intelligent venture capitalists in Silicon Valley are investing in cellulosic ethanol, not the corn stock.
The corn stock version is part of a shibboleth long adhered to by hack politicians of both the Republican and Democratic parties.
Apr 26, 2008 - 2:43 pm 8. bfwebster:Does no one here remember the Great Toilet Paper Shortage of 1973? Johnny Carson cracked a joke about a toilet paper shortage on the Tonight Show, and within 24 hours the shortage had materialized due to panic buying by consumers nationwide.
The same thing happens on a local basis in, say, Washington DC (where I lived for a total of nearly 8 years) when a snow storm approaches — people clear out milk, bread, and — yes — toilet paper from the supermarkets.
Sheesh. ..bruce..
Apr 26, 2008 - 3:34 pm 9. Denny, Alaska:Has anyone checked with the Lundberg brothers (and other rice growers in central California) on this so-called “rice shortage?”
No?
Apr 26, 2008 - 3:37 pm 10. Lynn:You all want to laugh and joke about this so called panic over rice but there are people in this world who make just a couple of dollars a day so even a small rise in staples can mean they go from being hungry to starving. We just need to keep our eyes open and watch. Fuel and food are following the same pattern up, up, up. In this so called global economy its not just about you.
Apr 26, 2008 - 3:58 pm 11. Bill Bradley:I don’t know about apocryphal shortages reported on TV shows a couple of decades ago.
I do know that in California, in this particular time frame of this particular universe, they are rationing rice at the various big barn wholesale outlets.
That is a fact.
Not that I have any innate interest in buying rice at Walmart, CostCo, whatever.
Apr 26, 2008 - 4:02 pm 12. Hal:Ethonal started out as a logical solition to importing oil over twenty some years ago. In New Mexico a Texas rancher was feeding his cattle on ethonal residue and his only expense was the trucking of the residue to the cattle.
Apr 26, 2008 - 5:29 pm 13. Rob Crawford:We knew then that oil prices were going up, but our political leaders sat on their lead bottoms without one attempt to provide alternative fuels. If you want to blame someone, then look to the politicians who cater to the lefties and enviromentelists. If the politicans had pulled their head out of the sand, we wouldn’t have these problems.
“I don’t know about apocryphal shortages reported on TV shows a couple of decades ago.”
I think the point was that a “shortage” can be created by merely claiming there is one; the reaction to the claim can create the shortage.
Apr 26, 2008 - 5:39 pm 14. mrsizer:Bill, it may be technically accurate to call limiting purchases to 200lbs per person “rationing”, but connotatively it is certainly wrong.
Apr 26, 2008 - 6:31 pm 15. mrsizer:My bad: 80lbs
Apr 26, 2008 - 6:34 pm 16. Earlg:One comment on the grain, rice, corn and food crisis: Oil is now tied to all of the above mentioned with Western production of ethanol to reduce our dependency upon oil, cleaner fuels and Gorebul Worming.
Oil goes up, so do the prices of commodities.
Leave it alone.
Apr 26, 2008 - 6:47 pm 17. Akatsukami:“I do know that in California, in this particular time frame of this particular universe, they are rationing rice at the various big barn wholesale outlets.”
And do you know why? Is it because of a genuine shortage of rice, or because fools believe liars who scream that the sky is falling…and can only be propped up by giving them totalitarian power?
Apr 26, 2008 - 7:56 pm 18. Bill Bradley:A. The 200 pound figure is wrong in my neck of the woods.
B. There was no rationing before.
C. At what point does this sound like the guy in Animal House shouting, “All is well,” just before he is trampled to death?
Apr 26, 2008 - 8:04 pm 19. John West:“Is the rice shortage real?”
Is anything real? How can anyone tell anymore. The B*ll Sh*t is piling up so high and so fast nowadays that most people don’t know what to think next.
When you consider how little time most people spend thinking, we are indeed in trouble and rice is the least of it.
Apr 26, 2008 - 9:58 pm 20. Peter:I’m told that the rice rationing is maily in places with larges Asian populations. Some are sending rice to their home countries, others are buying and hoarding because they actually remember famines.
Apr 26, 2008 - 11:07 pm 21. Javelin:I panicked and bought a pound of rice, oh wait, I had black beans and rice on the menu because of the leftover ham I wanted to use up.
Anyhow there is no shortage where I live in rural Texas but in Garland, Texas, a suburb of Dallas with a large Asian population the shelves had little in the Wal Mart I walked through.
The people here making the usual claims of suffering under the dreaded liberal green totalitarian dictatorship don’t seem to live in places where an extra dollar day(local equivalent) can be the difference between making it and hunger/malnutrition. Of course, its all my liberal enemy’s fault, Rush said so so it’s true!
Apr 27, 2008 - 12:15 am 22. esgeness:As I understand it, there isn’t actually a shortage; as an informative article in today’s Washington Post explains, the problem is that the “global economy” model never panned out. This is because of wealthier nations continuing to apply trade restrictions despite endorsing free trade. Whereas many in Africa used to engage in subsistence farming, they now have turned their efforts towards other enterprises (mining etc.), causing a reliance on exports which in turn has brought agriculture to a near halt. Wealthier countries (notably those in Asia) which rely on imports are now hording goods, making the “shortage” even more severe. Lucky for us we also live in a rich country that has the ability to stockpile goods –plus we’ve got plenty of arable land. I wouldn’t worry about what’s going on at a Costco in California. Instead I’d be worrying about the people of Senegal, Mauritania and the other African nations who’ve been screwed by a globalization that never quite happened.
Apr 28, 2008 - 9:38 am 23. always right:Let’s see how this is all Bush and the Evil Republicans’ fault.
Apr 29, 2008 - 10:52 am 24. Free In Idaho! » Blog Archive » Rice, Ethanol, Global Cooling:[...] have gotten into my stack, so we’ll just present them as bite sized chunks, starting with a tidbit on the rice shortage and the amazing shrinking dollar The best way to alleviate a shortage is to [...]
May 1, 2008 - 4:48 pm