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Asia Pacific Food Situation Update - November 2011

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Rice prices uncertain after Southeast Asian floods

International rice prices are uncertain in the wake of flooding that has devastated several nations in Southeast Asia, according to FAO. Despite the loss of a few million tonnes of rice in Thailand because of the floods, FAO has raised its forecast for global production in 2011 by 2.4 million tonnes to 721 million tonnes, a 3 percent increase and a new record. The agency also predicted that the international rice trade for the year will increase by 1 million tonnes to 34.3 million tonnes, a 9 percent increase and an all-time high.

The floods that began in September have affected Thailand, Cambodia, Viet Nam, Lao PDR and to some extent Myanmar in the Mekong subregion. The Philippines has also suffered from flooding, as have parts of Pakistan. Thailand has been hardest hit. More than 500 people have died and about 2.4 million people in 60 of the country’s 77 provinces have been affected.

While the flooding is not expected to have a significant impact on food security at the national level in Thailand, which holds large rice stocks, and other countries, FAO is monitoring the crisis and said “there are concerns about temporary food supply shortages in the affected communities due to the difficulties in delivering food assistance.” The organization said it was consulting with governments and potential donors about possible emergency support to affected farmers.

Opinions are divided on how the floods will affect rice prices. The World Bank has warned of possible spikes in the price of rice, but the International Rice Research Institute and the Thai Rice Exporters Association said the flooding is unlikely to have a major impact on already high rice prices. Nonetheless, the export price for Thailand’s white 100 percent B grade, the industry benchmark, rose on 9 November by USD 19 to USD 649 a tonne from USD 628 a tonne one week earlier. At the end of October, the price was USD 618 a tonne.

FAO said it does not expect a price surge as a result of the natural disaster, and added that a new Thai government policy of paying higher prices to rice producers will have a greater impact on Thailand’s exports than the floods. Many importing countries already have ample rice stocks, and there is more rice to be traded after India lifted its ban on rice exports, the organization said.