Drought in India, storms in Philippines could lead to new food crisis

A drought in India and typhoons in the Philippines have damaged large tracts of rice paddies, threatening to upset the fragile food market amid fears of shortages and riots, experts said Wednesday.

Agriculture Secretary Arthur Yap of the Philippines, the world's biggest rice importer, told an international rice conference the impact of the next "perfect storm" will be greatest on vulnerable countries like his, and the world's poor.

He proposed an international food reserve that will safeguard against wild fluctuations in food prices. When prices are down, producers can build stocks to halt further decreases, while consumers can turn to the reserves when prices are rocketing, Yap said.

"We are not very far off from possibly another rerun of 2008," he said. Last year's record-high price of rice and other staples led to riots in at least 30 countries, according to the World Food Program.

The biggest rice producers, Thailand and Vietnam, had curbed exports to protect domestic supply. In the Philippines, people formed long lines to buy low-quality rice at subsidized prices while traders were suspected of hoarding.

Rice is a staple for half of the world's population, a big chunk of them poor, Yap said.

India and Philippines are the two main drivers of the market, and rice traders are waiting to see if and how much they will import.

"I can tell you any panic reaction by any of the countries can easily flare up this market which is already in a very tight situation," said Samarendu Mohanty, a senior economist at the Philippine-based International Rice Research Institute. The institute has been trying to breed high-yielding rice varieties that can survive extreme weather.

The Philippines - which imports rice every year to cover a 10-percent domestic production shortfall - says it has lost at least 925,000 tons (840,000 metric tons) due to recent back-to-back storms.

Officials earlier said there will unlikely be need for more imports this year, but on Wednesday Yap refused to rule it out, saying the government will do "what we have to do to protect our people's food security."

While there is no official estimate yet of losses due to low rainfall in India, a drought of similar magnitude in 2002 lowered rice production in that country by 23.5 million tons (21 million metric tons), Mohanty said.

"So it is very likely the crop yield will be 20 million less than what we had last year," he added.

This year India's summer monsoon, vital for agriculture because of the rainfall it brings, was the weakest since 1972. In some parts of the country, however, floods also damaged crops.

And while India has sizable stocks, a large chunk of the reserve is earmarked for subsidies aimed at the poor and has not dampened local market prices, which have doubled in the last several months, he said.

Global rice production needs to grow around 1.2 percent to 1.5 percent a year to meet increasing demand from population growth.

Currently, growth is falling to less than 1 percent a year because of variety of factors, including water constraints, more land planted for crops used to produce biofuels, climate change and rising prices of fuel and fertilizer, Mohanty said.

There is a need to increase technological development to improve productivity even in unfavorable areas with seed varieties that are resilient against flood, drought, salinity and heat, he said.