The Global Rice Situation - A personal observation

The global rice "crisis" has so suddenly emerged as the current buzz words in the global media are "food security", inflation, rising commodities prices and how poorer nations will suffer. Taking a step back, one will realise that the media missed out one rather important fact...the issues have not changed for years, its only now, suddenly when prices shoot up that everyone is in a frenzy.
Government are busy, trying to avert inflation, starvation and well....losses in the polls. what has happened? In Rice, India effectively pulled the plug on some 3 million tonnes of rice from a world trade (10% of world rice trade), Vietnam decided to play it more cautiously and not rush out to sell their crop, as did the Thais. We must remember that the rice "trade" represents a paltry part of rice production...but we must also remember the poor importers who now struggle - The Philippines I felt actually did a good job, they did not get all they needed, but were organised and got a large part of their needs early, unlike the other net importers. Bangladesh and Africa I fear will feel the brunt. Both were key Indian supply markets, and both also represent the poorer segment of importers who will struggle to meet price and freight demand that is placed upon them. Indonesia will be interesting to watch as well, and maybe Cuba, to see if their relationships in Vietnam support their needs.

My only concern, we are talking about people, and poor people at that who will pay the price of what I see as a loss of interest from the global economies on agriculture. We were too busy building factories, removing agricultural land to make way for golf courses (and factories no less), we did not heed the warnings on water, on the need for another green revolution, and simply took for granted low food and commodity prices that have been the feature of the 90s and well...for most of the 2000s.

Another concern is the sudden rush of fund money into commodity markets. These funds are needed elsewhere, and if at all only contribute to more inflation as they create smaller bubbles within relatively small markets...be it coffee, sugar, cocoa, wheat, soy or oil palm...we now see even pension funds and other longer term vehicles take a closer look at commodities markets, where investment opportunities via equity is somewhat limited due to the nature of business (you still can't take a punt on the farmer whose importance is rising fast, only a handful of agri-business and trade companies listed in a number of stock exchanges). This money only seems to create more volatility, render some contracts useless as tools for hedging and add more risk. I'm not against funds and their motives, but fear for the worst.

So where are we now? I feel this is an excellent opportunity for life sciences, crop science and biotechnology, yes, GM foods could come to the rescue, if not at least be out to an extreme test, a test that will measure their true potential. But are the masses open to this? My humble take on this: The rich citizens of the EU will continue to exercise caution as they still can't trust their governments who have so often hidden the truth, the Americas and Asia, and Africa will have no choice (ie political failure, riots, starvation, the poor will pay the price, but also hold the political card), but to take a good look at the offerings. But don't forget, Food-Crop Science is a business, so there is a price to pay.

So where are we? Water shortage is still there, the farmer is still poor (well maybe not as poor as before), the farming community continues to get smaller, and there is still no long term solutions on hand as most still focus on the short term.

There is an urgent need to look at the long term, groups like IRRI abd CGIAR and just about that, and yet the rich sovereign funds, fund managers who are tasked to grow our retirement and investment monies are only concerned about market gains (and understandably, they get paid to show a return). The return on an investment in good research that yields us solutions for the future will come in the form of affordable food, political stability and the opportunity for economies to focus on a balanced, sustainable model for growth and development.

There is no question that the world is at crossroads, and needs to invest in our garden to for more fruits, fruits that will avert starvation!