2008 Global Rice Shortage - Causes

Causes

While the rice crisis did occur at the same time as the 2007–2008 world food price crisis, Tom Slayton has argued the spike in rice prices are a special case. Slayton argues that the price increases were a result of rising oil and petrochemical prices (peaking in July 2008); and export restrictions by a number of countries. Trying to protect citizens from inflating rice prices due to growing oil costs, some national governments, namely India and Vietnam, began restricting export of rice. Partly because of increasing wheat prices, the Indian government decided to increase the percentage of rice (over wheat) in its food distribution programs. To help secure food security, India (the source of more than 10% of world rice trade) stopped all non-Basmati exports in October 2007, lifting the ban temporarily, then re-applying it in April 2008. and some retailers began rationing sales, due to fears of insufficient global supplies of the grain. Vietnam, fearing shortages due to a cold wave on the Red River Delta in mid-January 2008, banned sales to international rice traders. Both of these cases caused a steady increase in prices during the first months of 2008. Other countries, including Egypt and Pakistan, as well as Brazil followed by placing their own restrictions on rice exports, helping to drive up the price even further.

In late April 2008, rice prices hit 24 cents a pound, twice the price that it was seven months earlier.

Six years of drought in Australia's rice-growing regions may also have encouraged people to fear a reduction in global rice supplies, and helped cause the commensurate rise in global prices.