Thursday, March 13, 2008

It’s popular, it’s fun, it’s expensive: Rice, the new meat

We’ve heard a lot of talk about how rising incomes has driven up the developing world’s demand for meats, which is helping fuel the increase of world food prices. (Cows have to eat something, you know.)

But here’s an interesting look from the Hindu Business Line (from Chennai) at how changing diets has lead to higher demand for rice. In the 1970s, many African countries ate rough grains like local corn, millet and sorghum. But now countries like Mali and Nigeria are on a serious rice bender, because it’s easy to produce (no milling involved), cooks quickly and remains relatively cheap, big bonuses for countries where more people live far from food sources, an effect of urbanization.

In other parts of Africa, especially those countries returning from the fog of conflict, rice consumption is also on the rise. (The story mentions Angola, Uganda and Mozambique.) African countries would rather import the rice because of its high start up costs for local production. Secondly, Africa doesn’t have nearly enough irrigation to grow a lot of rice. I’d add that social mores force people to often scorn locally grown rice, preferring to pay higher prices for imported rice.

All this demand for imported rice will keep its price high, even though only seven percent of world stocks are traded internationally. However, that number is increasing with demand, says the UN Food and Agriculture Organization. Nonetheless, rice prices have doubled in the past year and recently passed the $500-per-ton mark. FAO fears that demand will further outstrip production, reducing world rice stocks. However, if prices go too high, some believe that Africans will turn back to cheaper domestically produced goods, driving down demand.

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