As food prices continue to rise worldwide, there’s encouraging news today about this year’s rice production. The UN Food and Agriculture Organization says it’s expected to reach a record level this year in Asia, Africa and Latin America but warns it will not have an immediate effect on food prices.
Concepcion Calpe is a senior economist for the FAO. From Rome, she spoke to VOA English to Africa Service reporter Joe De Capua about the rice production forecast.
“We are foreseeing relatively strong growth over 2008/2009 production, which is mainly the result of the very high prices that have prevailed over the past year and which should trigger some response from producers by expanding cultivation. But this is very preliminary, and I want to highlight that because the bulk of these crops will come in November and some of them have not yet been planted. So there is still enormous uncertainty surrounding this special outlook,” she says.
Asked why rice production would increase because of higher prices and not the need for more food, Calpe says, “Producers respond to incentives and you should remember that the costs of producing rice have increased tremendously over the past two or three years. So, of course, prices should be higher for producers to compensate for these costs and to be willing to engage in risky activities. So, no, I’m not surprised. Producers respond mainly to economic incentives,” she says.
Calpe adds that governments are acting to provide more incentives to rice producers. They taken action to make fertilizers and seeds more available and improve the marketing systems. “So the expansion that we foresee will be both the consequence of the high prices and of these government incentives to step up production,” she says.
The FAO’s Rice Market Monitor report forecasts rice production increasing by 2.3 percent to reach a record 666 million tons. Last year, the rate was only 1.4 percent. “I want to remind you that there’s still much uncertainty because a lot of these crops depend on the monsoon pattern in Asia. And the monsoons will not reach the region until the end of the month or the beginning of June. So again, let’s be relatively careful as to what the production will be,” she says.
However, cyclones can heavily damage rice fields. Calpe says it is almost certain that the cyclone that struck Myanmar heavily damaged rice production there.
The FAO economist explains how rice prices might be affected if the favorable production forecast holds. She says, “The 2008 production that we foresee being much larger will come probably too late to relieve the prices in the next few months.” She expects prices to remain “relatively high.”