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Low Supplies, High Prices Cause Concern Among Asian Wheat Importers


Low global wheat supplies and skyrocketing prices on several agricultural commodities are causing concern in countries that rely on grain imports for many of their staple dishes. Several large wheat-producing countries, such as China and Russia, are reducing exports. As Naomi Martig reports from VOA's Asia News Center in Hong Kong, the restrictions are affecting countries that import grain to feed their people.

Wheat prices are more than 50 percent higher than a year ago. The price is being driven by lower production, increased demand from more affluent communities, and a spillover from increases in overall food prices. Both importing and exporting countries, rich and poor alike, are beginning to take measures to ensure they have enough food, at affordable prices.

This month, China began a temporary quota policy on exports of wheat, corn and rice flour. The ministry of finance has also announced export taxes, as high as 25 percent, on various staples, including wheat, corn, rice and soybeans. In Russia, officials have ordered a 40 percent export tax on types of grain. Abdolreza Abbassian is the Secretary for the Intergovernmental Group for Grains at the Food and Agricultural Organization in Rome. He says the most recent harvests in China and Russia were good, but both are concerned about protecting their own markets.

"They realize their grains could end up in the world market that has such a high demand because of shortages coming from other exporters, so these countries, supplies could end up in the world market, leave the country, and therefore eventually also result in higher prices in their own countries, despite their own good production," he said.

While the goal of such taxes and quotas is to stabilize domestic food prices, Abbassian says the restrictions are putting pressure on countries that rely on such imports, such as Malaysia and Indonesia.

"The countries which are importing from these exporters are, of course, the first casualties because they have to source their needs from elsewhere, and that elsewhere means a more expensive wheat for sure," he said. "Chinese were producing wheat that was very, very competitive. Their wheat flour prices in the region in southeast Asia something like 30 to 50 percent below prices of the same commodities coming in, let's say, from Australia or from the U.S."

Analysts say reduced exports from China are likely to raise prices of staples like flour and bread in Southeast Asia, which is already facing reduced shipments from drought-hit Australia, another major wheat exporter. In India, officials have scrapped import duties on wheat flour to try to keep a lid on prices, and government leaders in several countries are concentrating on controlling inflation of food prices, for fear of unrest in low-income communities.

Abbassian says there is likely to be relief in 2008, as farmers are already responding to high prices and will be planting more grains for the next harvest. But until then, he says it is important for governments, especially in poorer countries, to implement temporary measures to ensure their populations can afford enough food.