Indian Basmati exports to rise as output increases 10 lakh tonne

Exports of Basmati rice from India is likely to rise this year with
production slated to increase by at least 10 lakh tonne.

According to industry estimates, export of Basmati rice this fiscal is
likely to touch 20 lakh tonne against 16-17 lakh tonne last fiscal.
Export of Basmati rice from India has been growing at a rate of 50-60%,
according to estimates.

Meanwhile, a larger production of 1121 variety of Pusa Basmati is likely
to bring down procurement price of rice as well.

"Last year, farmers had a good price for 1121 Pusa and they went all out
to sow the variety," said Gurnam Arora, joint managing director of
Kohinoor Foods Ltd.

P roduction of Basmati rice in the country is likely to go up to 50 lakh
tonne this year from 40 lakh tonne last year, pulling down procurement
price of the crop. "We expect a major drop in the procurement price of
1121 Pusa Basmati rice," he said. Procurement price of 1121 is likely to
come down to Rs 20 per kg from Rs 40 last year.

Faced with competition from the Super variety of rice from Pakistan,
Indian Basmati prices in the international market have also come down.
The prices of Pusa 1121 this year is between $1,100 and $1,300 per
tonne. Super variety of Basmati, which tastes similar to Pusa (a lower
variety) from India, has a price of $1000 per tonne.

"Export issues with Iran have been solved and this year we expect to
export almost 10 lakh tonne of basmati rice to the country," Arora said.

Last year, India exported 8 lakh tonne of Basmati rice to the country
after which Iran suddenly put restrictions on Indian exports on alleged
presence of heavy metals in the Indian crop.

There are about 300 rice mills in the country exporting basmati rice to
Iran through certified rice exporters.

Earlier, Iran used to buy rice from Thailand and Pakistan before
shifting to the Indian crop a few years ago after 1121 was introduced in
the country. Apart from Iran, Basmati rice is exported to countries like
Kuwait and Saudi Arabia.

Agriculture Min to Address Declining Rice Prices Thailand

The Agriculture and Cooperatives Ministry will issue a reference price on rice according to moisture levels to counter the rapid decline in rice prices during this rainy season.

Agriculture and Cooperatives Minister Theera Wongsamut said the price of rice is on a rapid decline, as the rainy season has caused high moisture in cultivated rice.

The farmers must sell their rice immediately after harvesting, while buyers at rice mills are offering low price.

Theera said his ministry will discuss this problem with relevant agencies in order to find a solution.

The Agriculture and Cooperatives Ministry will announce the reference prices of rice according to the moisture level and will inform farmers of fair prices This will assist farmers when they sell their rice.

A central warehouse may be set up for the farmers to keep their product while waiting for moisture to decrease, before selling rice at a time when it will command a higher price.

The secretary general to the Office of Agricultural Economics, Apichart Jongsakul revealed the drop in rice price is due to high moisture during the rainy season, and a policy by the Commerce Ministry to push for distribution of stocked rice creates a psychologically harmful effect on rice mill owners, causing them to offer low prices to farmers.

Another factor is that the rice mills are waiting to buy high-grade rice cultivated from in-season fields which will enter the market in November.

Apichart suggested the Commerce Ministry postpone the distribution of stockpiled rice and resume it at a better time. During the next year, the price of rice in world market is likely to increase as demand from consumers increases and supply from other rice-growing countries have been diminished from severe changes in climate.

India and China have already halted their rice exports, while Vietnam faces a problem of inadequate supply to meet export volumes designated by trade contracts. While these three major competitors face problems in rice export, an opportunity is available for Thailand to dominate rice exports.

Apichart said the drop in rice prices will cause the subsidy amount the government paid through the price guarantee program to be large.

He added that in order to accurately assess the impact of the price drop, the reference prices, which will be announced in November, must be taken into consideration.

The principle is bigger the gap between reference price and guarantee price, bigger subsidy the government will have to pay. However, he believed the national rice committee will issue measures to increase rice price.

He revealed that at present the official price of normal white rice with 15 per cent moisture is in the range of 7,000 to 8,000 baht per ton, but in reality, farmers can sell this type of rice for only 5,000 baht per ton.

He urged the committee on reference prices to conduct a thorough review before announcing the reference price.

Meanwhile, the general director of the Rice Department, Prasert Kosanvit, said he received a report that farmers can sell white rice with 15 per cent moisture at 8,000 baht per ton.

He suggested the farmers dry their rice and not rush to sell during this time.

He added that the farmers who have registered with the price guarantee program should wait for the announcement of a reference price and sell their rice when the gap between the reference price and guarantee price is wider in order to make bigger profits from the subsidy.

Rice Harvest Loss May Mount in Philippines on Typhoon

Rice losses in the Philippines, the world’s biggest importer, may increase as more than 1 million metric tons of the crop has yet to be harvested in areas in the path of a typhoon, a government official said.

Production loss may jump from more than 800,000 tons last week, Agriculture Undersecretary Emmanuel Paras said in a phone interview from Manila today. Fourth-quarter harvests make up 37 percent of annual output, according to the Bureau of Agricultural Statistics.

Typhoon Lupit was forecast by the Philippine weather bureau to bring rains in northern and central Luzon, the biggest rice- growing regions, which contribute 30 percent the nation’s output. The storm was 350 kilometers east-northeast of the Aparri town on the northern tip of Luzon at 4 a.m. local time.

Severe losses from storm damage may prompt the Philippines to raise its rice imports next year to more than the estimated 2 million tons, likely boosting global prices. Rice futures jumped to a record last year, as the nation lifted purchases and some exporters curbed shipments on concern there may be a shortage.

“Governments will scramble to try to contain the rising rice prices again,” as supplies tightens and higher oil prices push up prices of commodities, Frederic Neumman, an economist at HSBC Holdings Plc in Hong Kong, said by phone today.

January-delivery rice gained 0.5 percent to $13.93 per 100 pounds in after-hours trading in Chicago at 4:04 p.m. Singapore time, reversing an earlier loss of 0.7 percent. In comparison, wheat dropped 1.2 percent and corn lost 1 percent.

Record Imports

Royal Bank of Scotland Plc. economist Euben Paracuelles forecast last week that the nation’s rice imports “could approach 2008 levels.” The government and the private sector imported a record 2.4 million tons last year, National Food Authority spokesman Rex Estoperez said yesterday.

Futures advanced as much as 2.8 percent on Oct. 14 after Agriculture Secretary Arthur Yap said the nation may add a second tender for the staple by end of the year, on top of the 250,000 tons the government is seeking to buy, to meet a shortfall. National Food Authority Deputy Administrator Vic Jarina said Oct. 19 a series of tenders may be held by yearend.

Without storm damage, the Philippines typically has a production deficit of about 10 percent of its annual demand, Estoperez said.

Lupit’s forward movement, to the west-southwest, has slowed in the past two days and Lupit’s eye is expected to make landfall in northern Luzon after 2 a.m. on Oct. 25, according to the agency’s forecast.

Cambodia to export organic rice to Germany

THE Cambodian Centre for Study and Development in Agriculture (CEDAC) said Sunday it would start exporting organic jasmine rice to Germany at the beginning of next year, following an agreement originally made in 2007.

Lang Seng Haung, CEDAC’s enterprise manager, said Cambodia would ship 100 tonnes of the rice variety to Germany in January as part of a three-year export agreement totalling 450 tonnes at US$1,400 per tonne.

“We will increase our supply of this kind of rice to Germany in the coming years, which will afford Cambodian farmers an opportunity,” he said, referring to the agreement, which will see 150 tonnes exported in 2011 and a further 200 tonnes during the following year to conclude the current deal.

In 2007, CEDAC, representing 8,000 organic rice growers in seven provinces, signed the trade agreement with German-based company Richers.

More export orders sought
Lang Heng Haung said that he anticipates further export orders of organic jasmine rice will be agreed with the United States. Those orders would likely reach “at least 150 tonnes” in total over next year, he said.

Mao Thora, secretary of state at the Ministry of Commerce, said that growing organic crops remains a difficult process compared to the more common fertiliser-treated alternatives.

“Only saisfaction among buyers and a proper production [standard] will result in fulfilling the aim to export this kind of rice in large amounts in the future,” said Mao Thora.

So far this year CEDAC members have exported about 75 tonnes of organic rice, 60 tonnes of which went to the US and the remainder to Malaysia.

Basmati output to rise slightly, price may drop 30%

Production of basmati this year is likely to be around four million
tonne, marginally higher than that of last year, but its price is
expected to drop by up to 40 per cent in the next three months, a
leading basmati exporter said.

"The production will be higher by 0.5 to one million tonne but the price
will drop sharply by about 30-40 per cent in the next three months
period both in domestic and export price," Kohinoor Foods Ltd Joint
Managing Director Gurnam Arora told PTI here.

He said the major factor that would trigger a decline in basmati price
is about 50 per cent higher production of 'Pusa 1121' variety of basmati
last year and lowering of support price.

There is a 50 per cent increase in the basmati rice area in Punjab and
Haryana. The area has been increased from eight lakh hectare last year
to 15 lakh hectare this year in these two states, he said.

"The price of basmati rice, which usually hovers around $1,200-1,300 a
tonne, went up by almost 69 per cent to $ 2,200 a tonne 2008-09 due to
heavy demand from Iran for 'parboiled 1121' variety," Arora said.

He expects that the export price would remain around $1,200 a tonne this
year.

Gurnam said basmati export may rise by about 30 per cent this fiscal to
about 2.2 million tonnes up from 1.8 mt in 2008-09, as Iran is expected
to import a larger quantity of the commodity after a controversy on
quality was resolved.

He said the governments of both the countries had clarified that '1121'
variety basmati rice do not contain any harmful metals and chemicals.

Iran imported about eight lakh tonnes of basmati last year and this year
it could import close to one million tonnes, he added.

Owing to projected drop in prices, companies are realigning their
strategies toward domestic market. Kohinoor Foods itself had introduced
two new varieties of basmati rice in the domestic market and foraying
into ready-to-eat segment.

Cambodia Still not exporting rice to Philippines despite high demand after storms

THE head of the National Rice Millers Association of Cambodia (NRMAC)
said Tuesday that Cambodia would not be selling rice this year to the
Philippines, the world's biggest importer, despite the country's high
demand for the crop following recent storms, because Vietnam had already
sewn up agreements with Manila.

Phou Puy told the Post on Tuesday that he had contacted the Philippine
government regarding the issue in an attempt to persuade the country to
buy rice from Cambodia.

"We really want to sell rice to the Philippines, but we will be able to
do so next year … not this year," he said, adding that Cambodia was
looking to supply 500,000 tonnes per year in future to its fellow ASEAN
member.

Bloomberg reported Tuesday that Hanoi expected to start signing
rice-export contracts with Manila from the end of this month, earlier
than usual this year due to storms and flooding that have hit the
archipelago in recent weeks. Vietnam was due to export about 250,000
tonnes to the Philippines, the report added.

Thun Vireak, director general of rice exporter Green Trade, said Tuesday
that Vietnam remains the biggest obstacle to the Kingdom's selling rice
to the Philippines.

"We have been trying to export Cambodian rice to the Philippines, but we
have still not succeeded," he said.

Meanwhile, the Kampong Cham branch of the rice millers association said
Tuesday that it planned to build a US$1 million rice mill to dry, mill
and polish rice for export. Local association President Suor Kheang said
half of the cost would be financed by members and the rest by a loan
from the Rural Development Bank.

The operation would include a storehouse in the province's Batheay
district, a $60,000 drying machine to be imported from Taiwan, a
$400,000 polishing machine from Vietnam and a $80,000 miller, also
imported from Vietnam.

The mill, which will be capable of processing 10 tonnes of
export-quality rice per hour, is expected to be running by January, Suor
Kheang said.
The storehouse, which is under construction, will be able to hold 8,000
tonnes of milled rice or paddy. Suor Kheang said the association was
still awaiting delivery of the machines.

Rural Development Bank Chairman Sun Kunthor said the bank had lent $18
million to local miller associations this year to buy rice and build
small and medium-size millers.

"We are ready to provide loans to support associations in various
provinces who wish to build mills and buy paddy to produce quality rice
to export," he said.

Cambodia, which produces around 7 million tonnes of paddy every year,
has only limited rice exports due to a lack of milling capacity.

Earlier this month, the NCRMA said it had missed its deadline for
delivery of a shipment of jasmine rice to Hong Kong that had been billed
as a milestone for the sector's export hopes.

Rice exports to Nigeria plunge

Nigeria is Thailand's largest rice-export market, particularly for parboiled rice. Exports to this market account for 11.5 per cent of Thailand's rice exports.

Rice exports to Nigeria dropped 12.09 per cent to US$379.9 million (Bt12.68 billion) in the first eight months of the year.

Thai Rice Exporters Association president Chookiat Ophaswongse said local rice exports to Nigeria had plunged in the past month.

"Nigerian importers have delayed Thai-rice imports, because they're facing financial difficulties. The Nigerian government is now inspecting all banks in that country to determine whether credit was approved for traders intending to evade high import tariffs," said Chookiat.

However, Chookiat believes the problem will soon be solved.

Rice imports to Nigeria are subject to a 40-per-cent tariff. The country normally imports 250,000-300,000 tonnes of Thai rice a month.

Recently, it was reported that shares in five Nigerian banks bailed out by the government last week had been suspended.

The five banks are Afribank, Intercontinental Bank, Finbank, Oceanic Bank and Union Bank, which received a combined injection of 400 billion naira (Bt88.92 billion).

The value of shares in the banks tumbled after the bail-out and the sacking of the banks' bosses, prompting a halt in trading.

Philippines May Hold Series of Rice Tenders This Year

The Philippines, the world’s top rice importer, may hold a series of tenders for the staple by yearend after two storms hurt crops, and warned that a third supertyphoon now churning off the nation may cut output further.

Supertyphoon Lupit, due this week, may “affect” harvests, National Food Authority Deputy Administrator Vic Jarina told reporters in Manila. Agriculture Secretary Arthur Yap had said Oct. 14 that a second rice tender may be needed by yearend because of the damage, on top of one initially set for Oct. 30.

Increased Philippine purchases may boost global demand, driving prices higher. Futures in Chicago gained as much as 2.8 percent on the day of Yap’s comments, and reversed losses to advance today. Rice is the staple food for billions in Asia.

The potential increase in Philippine imports may boost prices, Chookiat Ophaswongse, president of the Thai Rice Exporters’ Association, said today. Still, given that the Thai government has “ample” stockpiles of about 6 million tons, buyers are unlikely to panic, Chookiat said by phone.

Rice for November delivery gained 0.3 percent to $13.69 per 100 pounds on the Chicago Board of Trade at 4:08 p.m. in Manila, reversing a loss of as much as 0.5 percent. The contract rose to the highest price since January after Yap’s Oct. 14 remarks.

Philippine rice supplies are sufficient for this year, Jarina said. The 250,000 metric ton tender initially set for Oct. 30 -- the earliest tender planned for next-year supplies -- was delayed till Nov. 4 after suppliers cited a scheduling conflict with a conference, Jarina said.

Food Inflation

Rice jumped to a record last year after the Philippines boosted purchases and some exporters curbed shipments amid concern that there may be a global shortage. Corn and wheat also touched all-time highs in 2008, pushing food inflation higher and sparking unrest in nations including Haiti and Egypt.

If Lupit “hits rice-producing provinces, it will affect output,” said Jarina. “That’s why we’re waiting for the assessment on how much the shortage will be.” He added: “Depending on the result of the assessment, we’re going to most likely buy again. That should be before the end of the year.”

Supertyphoon Lupit was 1,158 kilometers (719 miles) east- northeast of Palanan on Luzon island at 2 p.m. local time, according to the U.S. Navy Joint Typhoon Warning Center. Philippines authorities are planning evacuations should the storm approach the country.

Lupit weakened slightly today to a Category 4 storm, the second strongest on the Saffir-Simpson scale of cyclone strength. Such storms have winds of 210 kph to 249 kph and are capable of “devastating damage,” according to the U.S. National Hurricane Center.

Tropical Storm Ketsana struck the Philippines’s largest rice-growing region on Sept. 26, followed by Typhoon Parma, which hit parts of Luzon on Oct. 3.

The Philippine Department of Agriculture estimated Oct. 13 that losses to rice output from Parma and Ketsana may be 13 percent of the 6.5 million ton fourth-quarter forecast. That equates to about 545,550 tons of milled rice, according to Bloomberg calculations based on average recovery rates.

Philippines considering additional rice auction

THE COUNTRY might hold another tender before the year ends after the auction for 250,000 metric tons (MT) of rice scheduled on Nov. 4, an Agriculture official said.

The world’s largest rice buyer is securing its 2010 import requirements early after tropical storm Ondoy and typhoon Pepeng last month wreaked P18.4 billion worth of damage to the farm sector, mostly on rice.

Depending on the assessment of an inter-agency committee on the full extent of storm damage and how much rice needs to be imported next year, "we’re going to most likely buy again," Ludovico J. Jarina, deputy administrator of the National Food Authority (NFA) and the chairman of the NFA’s bids and awards committee, told reporters yesterday at the sidelines of the agency’s pre-bidding conference in Quezon City.

"That [additional purchase] should be locked in within this year, to be delivered next year," he added.

"The preparation is not only for the damage [caused by the two recent storms] but the eventuality that there might be another typhoon."

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Vietnam to sign export rice contracts with Philippines for 2010

Vietnamese rice exporters will sign export contracts with the Philippines for the year 2010, the local newspaper Liberty Saigon reported Monday.

According to Vietnam's Ministry of Agriculture and Rural Development, the to-be-signed rice volume to be exported to the Philippines for 2010 will be 250,000 tons of rice. The contract signing is expected to be at the end of this month, two months earlier than usual.

The Philippine move to intensify rice procurement to boost its stockpile and assure food security amid the recent calamities will make the price of Vietnamese white rice 25 percent broken increase in the international market, said local rice traders.

According to the Vietnam Food Association, the country signed contract to export 6 million tons of rice so far this year, the record high in the past 20 years.

In the first nine months this year, Vietnam exported 4.98 million tons of rice, bringing in 2.24 billion U.S. dollars, up 34 percent year-on-year in volume, down 7.8 percent in value, said the General Statistics Office of Vietnam.

RP rice imports hike world market prices

The Philippines is likely to go back to the global rice market after a 250,000 tonnes import tender on Nov. 4 as it seeks to lock in supply for its 2010 needs before prices start rising, a senior state official said on Monday.

"We're going to most likely buy again," Ludovico Jarina, deputy administrator at the National Food Authority, told reporters when asked if there would be more rice import tenders this year.

But it may be too late.

Rice prices have already risen in the world market as traders anticipate more demand from the world's largest rice importer.

Bloomberg said rice for November delivery was up 0.3% in the Chicago Board of Trade at 4 p.m. on Monday, reversing a loss of 0.5%.

Trading prices for the rice commodity was already at its highest level since January.

The Philippines has been buying imported rice either through a government tender or via government-to-government deals with countries such as Thailand and Vietnam.

Major rice producing regions were hit by back-to-back typhoons Ondoy and Pepeng (international code names Ketsana and Parma), damaging billion pesos-worth of crops and infrastructure 

Meanwhile, the NFA is also planning to sell some P27 billion worth of 10-year domestic bonds on October 26 to fund its operations and pay its maturing debt.

The NFA added that the offering may be divided into several tranches depending on the market.

Reforms in rice export mechanisms to ensure Vietnam farmers’ profits

Traders would be allowed to buy rice at market prices and the government will subsidize losses incurred by farmers when world prices fall under a new mechanism being devised for rice exports.

"The market mechanism will remove monopolies and obstacles for traders and farmers (in rice production and sale). Farmers' profits of at least 30 percent will be ensured," Deputy Minister of Agriculture and Rural Development Bui Ba Bong told Thanh Nien Weekly.

The government will no longer set any limits on shipments, but decide the export volume based on world demand. The removal of export quotas will not affect national food security, he said. "We will not put forth fixed export volumes for each year, but flexibly direct shipments according to weather conditions and the rice output."

Vietnam's export quota system has faced repeated criticism from provincial authorities and exporters, who have said they have been allowed to export much smaller volumes than their capacities.

The rice export quota for this year was originally capped at 5.2 million tons, but Deputy Minister of Industry and Trade Do Huu Hao recently said this may be increased to 7 million tons.

Bong said to prepare for a market-based rice sector, farmers should focus on improving quality so that their produce fetches good prices.

Nguyen Dang Chi, vice head of the Export-Import Department under the Ministry of Industry and Trade, said local authorities should increase monitoring of export contracts to ensure the volume signed is not higher than the output.

Under the new mechanism, surveillance of export prices should also be strengthened so that farmers do not suffer losses, Chi said.

Associated and indirect benefits

Chi said associations of rice producers, traders, processors and exporters should take steps to harmonize members' benefits so that the rice market is stabilized.

"Our associations have not done this yet," so the prices have sometimes gone out of control. Traders often rush to purchase paddies when the international market is favorable, and engage in distress sales when it turns unfavorable.

In Thailand, the associations work together to put forth acceptable prices to all parties in case the market experiences big fluctuations, he said.

Head of the Price Management Department under the Ministry of Finance, Nguyen Tien Thoa, said the state has offered indirect support to farmers via policies for firms. It has offered preferential taxes for agricultural equipment and provided credit support for firms so they have enough capital to purchase rice from farmers and prevent prices from falling.

Such assistance dose not violate Vietnam's international trade commitments, he said. "To support farmers in a more comprehensive manner, we, in 2010, will build a fund to stabilize rice prices when they fall."

Chi said more warehouses should be built to meet demand for maintaining rice reserves.

Export prospects

Rice exports are expected to rise late this year when big export contracts can be signed, according to the VFA. The country shipped 4.98 million tons of the grain in the first nine months this year, a 40-percent year-on-year increase. However, export revenues of $2 billion marked a 6.2 percent decline in value against the same period last year.

The VFA expects an additional 1.2 million tons of rice to be shipped in the final quarter of this year, taking total exports this year to a record setting 6-6.2 million tons. As of September 30, export contracts totaling 5.8 million tons had been signed.

The association also forecast an increase in rice prices next year, when the world's demand for the grain is expected to exceed supply by 7-9 million tons. Next year, India's rice output is expected to be down by 16-18 million tons due to drought, while reserves in Thailand and Vietnam are estimated at just 9 million tons.

Rice futures on Wednesday surged to a nine-month high in Chicago after the Philippines, the world's biggest importer, said it may boost overseas purchases because storms in the past two weeks have damaged the domestic crop, Bloomberg reported.

"If we start having problems, weather problems, production problems, the price of rice is going to skyrocket over the next decade," investor Jim Rogers, chairman of Singapore-based Rogers Holdings, told Bloomberg. "When it happens, I don't know," he said. "Rice is a basic foodstuff for much of the world."

Rice Policy Committee to Consider Direct Purchase of Rice from Farmers

The Commerce ministry is urging the National Rice Policy Committee to
control the price of rice in the market and keep it at the same level as
the guarantee price, in order to further support rice farmers.

Commerce Minister Pornthiva Nakasai revealed that the ministry will
suggest that the National Rice Policy Committee, led by Prime minister
Abhisit Vejjajiva, consider stability measures for rice prices in the
market after the price of paddy rice in the market continued to drop.

She suggested that the Public Warehouse Organization and the Marketing
Organization for Farmers, in cooperation with rice exporters and rice
mills, directly purchase the paddy rice from farmers at a high price.

Pornthiva added that the support policy for rice prices needs to be
implemented immediately, and should tackle rice prices in the market,
which continue to drop.

She said that the the government set the the price guarantee for jasmine
paddy rice at 15,300 baht per ton while a recommended price for the
jasmine paddy rice on October 16-31 is 14,940 baht per ton. The
government will cover the compensation, worth 360 baht.

The price guarantee for white paddy rice has been set at 14,300 baht per
ton while a recommended price for the white paddy rice from October
16-31 is 13,860 baht per ton and the government will pay compensation of
440 baht.

In addition, the price guarantee for Pathum paddy rice is set at 10,000
baht per ton, while a recommended price for the Pathum paddy rice during
the October 16-31 period is 8,940 baht per ton and the government will
pay compensation of 1,060 baht.

The recommended price for sticky paddy rice for October 16-31 is 7,470
baht per ton and the guaranteed price is 9,500 baht per ton, while the
government will pay the compensation of 2,030 baht.

Kazakhstan harvested 315 thsd tonnes of rice in bunker weight

In the current year, Kazakhstan harvested 315 thsd tonnes of rice on
bunker weight, the export potential totals nearly 100 thsd tonnes,
declared Ayna Kusainova, the director of the department of processing
industry and agricultural food markets of the Ministry of Agriculture of
the Republic of Kazakhstan, on October 16.

According to A.Kusainova, the country received rather good harvest and
increased the sowing areas of the grain. As a reminder, last year, rice
production volumes totaled 255 thsd tonnes. In the current year, rice
production volumes total 290 thsd tonnes in clean weight, the domestic
consumption – nearly 90 thsd tonnes, and the export potential – nearly
100 thsd tonnes.

Ghana to increase rice production in two years

Mr Kwesi Ahwoi, Minister of Food and Agriculture, on Friday said the
country could achieve self-sufficiency in rice production within the
next two years.

He said that the prediction was based on the large quantities of rice
being produced at Aveyime and other rice growing areas, especially in
the Northern part of the country.

Mr Ahwoi explained that for that target to be achieved there was the
need for Ghanaians to show preference to locally produce rice adding,
that Ghana currently imported about $500 million worth of rice annually.

He was speaking at a durbar of chiefs and people of the Kwahu North
District (Afram Plains), organized as part of a three-day visit of
President John Evans Atta Mills to the Eastern Region to thank the
people for voting the National Democratic Congress (NDC) to power in
Election 2008.

He announced that government was to establish a Buffer Stock Company
Limited to guarantee prices and ready market for agriculture produce in
the country.

Mr Ahwoi said consequently, the President had given the Ministry mandate
to take over all abandoned maize silos and warehouses in the country for
the project to take of.

He said under the programme, the abandoned silos in the district would
be rehabilitated for storage of maize.

Mr Ahwoi said the Ministry would build markets within the district for
farmers to sell their produce.

He said as part of efforts towards agriculture mechanization in the
area, the Ministry was encouraging private tractor operators to support
farmers in the area and that a private company had established
facilities to that effect.

Mr Ahwoi said to help reduce pollution of sources of water and the
destruction of farms by animals, the Ministry in collaboration with the
District Assembly was to establish fodder banks at Forifori, Amankwa,
Wawase and Memkyemfre.

He said such facility would help provide water, fodder and sheds for
cattle and herdsmen.

Mr Ahwoi said government would create a green belt to reduce bush fires
and sink more boreholes to provide potable water for the people

Rice price might shoot up in 2010

Global rice prices may shoot up by March-April 2010 on the back of heavy buys by the world’s largest rice importer, Philippines, even as India gears up to possible imports during the same period. India does not import rice and has only exported for more than a decade now. India also ranks among the world’s top rice consumers. “We will only be able to assess the possibility and quantum of rice imports by March-April after projections of the rabi wheat output have been made for the 2009-10. The CoS early in September directed that the rice budget be reworked after production assessments become clear. We will be able to do that after mid-October when the advance estimates are scheduled,” a food ministry official said. As per assessments, in the aftermath of the recent floods in Karnataka and AP, a kharif rice output shortfall of 15 million tonnes cannot be ruled out. According to projections, there will be rice imports of 2-5 million tonnes in early 2010.









That has forced the government to tangentially revise its output target for winter rice from an average 12 million tonnes to 18 million tonnes. In addition, it is pushing for an early rabi sowing in order to boost wintersown food crop output to a record high. With that in mind, the government earlier this week ruled out any possibility of opening up wheat exports, banned since 2007, in the near future. It, however, also put off a related key decision on whether to ease plant quarantine restrictions on wheat imports as done in 2006 when imports were made to boost domestic supply and cool prices.

To defuse the pressure on wheat prices in the retail market, India plans to sell around 4.5 million tonnes of the commodity in the peak consumption period of October-December in the domestic market, through tenders to bulk consumers, on the basis of allocated quantity to states by Food Corporation of India.

In September, Philippines was hit by natural disasters that wiped out an estimated 4.5 lakh tonnes of rough rice. The slump engineered by Tropical Storm Ketsana and Typhoon Parma was “a significant loss,” according to commodity monitors.

Towards the end of last month, Philippines National Food Authority spokesman Rex Estoperez said the damage to rice crops from typhoons Ondoy and Pepeng would be felt by the country in the first half of 2010. A decision on the quantum of imports could be taken this week. Thailand and Vietnam, the two countries that benefited the most from India’s rice export ban, are already sizing up the gains.

More parboiled rice available from Thailand

Strong exports of parboiled rice have drawn new players and investment
into the business, say leading exporters.

About 50 rice millers are planning to remodel their milling process and
install steamers and dryers to produce parboiled rice, which is popular
in many countries in Africa and the Middle East.

Rice millers, who have seen their business decline since the government
terminated its rice-pledging programme early this month, are among new
players entering parboiled rice production.

"The move is expected to significantly increase the supply of parboiled
rice, by about 50%, and to prop up exports of the grain substantially
this year," said Vichai Sriprasert, president of Riceland International
Co, a market leader.

Thailand's rice exports - especially of parboiled rice - have benefited
greatly from India's absence from the market. India last month announced
its suspension of most rice exports except basmati due to severe drought.

The absence of India from the market will likely increase Thailand's
parboiled rice exports to between 3 million and 3.5 million tonnes this
year, said Mr Vichai.

Restricted Indian exports will also propel Thailand's total rice exports
to between 8.7 million and 9 million tonnes for the year, passing a
previous forecast of 8.5 million tonnes, according to the Thai Rice
Exporters Association (TREA).

"Parboiled rice has become a big export grain since last year, following
the global food crisis, and its sales remain brisk with less
competition," said Mr Vichai, the TREA's honorary president.

Kasikorn Research Center expects India's absence from the market to lift
Thai rice exports strongly from the last quarter of this year through to
the first half of 2010 - especially parboiled rice, which could reach
3.5 million tonnes by the end of 2009, up from a normal volume of 2 million.

African countries, which bought about 78% of Thai parboiled rice last
year, are likely to shift their orders from India, propelling Thailand's
rice exports to nearly 9 million tonnes this year.

Given strong demand from Africa, which imported 4.6 million tonnes of
Thai rice last year, exports next year are expected to boom, he said. Mr
Vichai.

Parboiled rice - which is made by soaking, steaming and drying rice
prior to milling - also has strong markets in Middle East countries such
as Saudi Arabia, the United Arab Emirates, Kuwait and Oman. These
markets bought parboiled rice from Thailand worth about US$180 million
in the first eight months of this year, up 23% year-on-year.

Converting a conventional mill to produce parboiled rice can cost 10
million baht for a capacity of 100 tonnes a day, said Adisak
Pramualmitra, executive vice-president of CP Intertrade Co.

Update on India rice

India, the second-biggest producer of rice and wheat, does not need to import grains because its reserves are adequate to fill production gaps after drought and floods damaged summer-sown crops, a minister said.

“We have enough stocks of rice and wheat,” Junior Food Minister K.V. Thomas told reporters in New Delhi today.

The nation’s rice output is forecast by the government to drop 10 million tons from a record following a drought in first half of the year and floods in paddy-growing areas in the south earlier this month. Rice reached the highest level since January today after the Philippines, the biggest importer, said it may arrange a second tender by yearend to purchase the cereal after storms cut domestic output.

Rice jumped to a record in April 2008 after the Philippines increased purchases and some exporters, including India, curbed shipments on concern that there may be a global shortage. Corn, wheat, soybeans and palm oil touched all-time highs last year, stoking inflation and sparking unrest from Haiti to Egypt.

“If we start having problems, weather problems, production problems, the price of rice is going to skyrocket over the next decade,” investor Jim Rogers, chairman of Rogers Holdings, said in an Oct. 12 interview. “When it happens, I don’t know,” he said. “Rice is a basic foodstuff for much of the world.”

Rough rice for November delivery gained as much as 2.8 percent to $14.29 per 100 pounds on the Chicago Board of Trade, the highest level since Jan. 13. The futures, which touched a record $25.07 per 100 pounds in April last year, were at $14.26 at 4:50 p.m. Mumbai time.

Net Buyer

India, which last bought wheat abroad in 2007 and became a net buyer of sugar in the crop year ended Sept. 30, has bought a record 55.1 million tons of rice and wheat from crops harvested in the year ended June 30. That’s enough to last more than a year, Farm Minister Sharad Pawar has said.

The government, the biggest buyer of food crops, purchases cereals such as rice and wheat at guaranteed prices from farmers for sale to the poor at subsidized rates.

In August, the price paid to rice growers was raised to 950 rupees ($21) for 100 kilograms (220 pounds), up from 900 rupees, as inadequate rains forced them to lower acreage by 6.3 million hectares. The price of grade-A grain was raised to 980 rupees.

Exports of wheat were halted in February 2007 and overseas sales of non-basmati rice on April 1, 2008.

Egyptian rice report

On September 17, the Minister of Trade and Industry (MoTI) extended the rice export policy for one more year until October 2010 in an effort to decrease local production to conserve water resources and keep domestic rice prices well below world market prices to benefit consumers. The policy is officially termed an “export ban,” but actually consists of a hefty export tax and requirement to deliver one ton of rice to GASC (Government Authority for Supply of Commodities under MoTI) at below market prices. Given the continued export policy, Post has reduced 2009/10 exports from 900 TMT to 500 TMT. Broken rice exports have never been included in the Egyptian rice export policy. Meanwhile, under the Egyptian European partnership agreement, Egypt is eligible to export up to 80,000 MT of broken rice and 70,000 MT of milled rice to the EU countries at zero duty. Currently, the EU import duty on Egyptian rice over the quota is 127 Euro/MT. Up until recently, rice has been one of the most lucrative crops for small and medium sized farmers, driven largely by regional and Asian export markets. Government policy is to limit rice cultivation because of the heavy water use and to maintain low rice prices in the domestic market for consumers. The GoE also wants to reduce expenditures by GASC on providing rice as part of the food ration system. Farmers end up getting squeezed in the middle and are not profiting from high world rice prices. As of August 16, The Ministry of Trade and Industry activated the decree that was issued on July 20th which doubled the export tax for rice from LE 1,000 ($182) per MT to LE 2,000 ($364) per MT (US$1.00=LE 5.53). According to the first tender under the new export tax policy, traders will deliver milled in one kg bag rice to the government at LE 700 per MT instead of the previous LE 1 per MT. Exporters obtain non exportable rice grades (12% broken and above) from the market at LE 1,400 per MT and deliver to the government at LE 700 per MT. The LE 2000 export tax will go to the Ministry of Finance instead of the Ministry of Trade (GASC). Exporters will lose only LE 700 (price differential between market price and procurement price). The cost for exportable grades (5% and 6% broken) is 1,500 per MT. Accordingly, the cost of exported rice to the traders per MT will be LE 4330 ($783), calculated as follows:
Net Cost to provide 1 ton of rice to GASC LE 700 Milled Rice FAS at. export port LE 1,630 Export Tax LE 2,000 Total cost to export 1 ton of rice LE 4,330 ($783) There is a limited trade in rice export permits, with the price being the difference between the price for non-exportable grades of rice and the LE 700 per MT government purchase price plus a markup of LE 100-150 per MT. The export price for Egyptian rice is currently averaging $ 850 per MT/FOB. With that price, exporters are still making a good margin. According to the rice exporters, export licenses for 750,000 MT of Egyptian rice were issued, while only about 500,000 MT from March 1st through September were actually exported. Because of the low price that rice farmers received for 2008/09 crop, most observers are expecting that the rice area planted for 2009/10 will be about 25 percent lower than the 2008/09 level. A further decline in rice area is expected for 2010/11.

China to issue 2010 quotas for wheat, corn, rice and cotton

China will issue low-tariff grain import quotas for 2010, including wheat, cotton, corn and rice, as part of its World Trade Organization joining commitments.

The quota levels remain unchanged from this year, according the National Development and Reform Commission.

The quota for wheat is set at 9.64 million tons and for corn at 7.2 million tons, of which 90 percent of the wheat quota will go to state-owned companies while 60 percent of the corn quota is allocated for state companies.

The quota for rice is set at 5.32 million tons and for cotton at 894,000 tons for imports under low tariffs for 2010, the commission said in a document posted on its website.

Indonesia Revises up '09 Rice Output, Eyes Exports

Indonesia's has revised up its forecast for rice output this year to 63.9 million tonnes of unmilled rice, up from an earlier estimate of 63.5 million tonnes, an agriculture ministry official said on Tuesday.

"We are confident that rice output will exceed its target. We will see the biggest ever output since our independence," Ati Wasiati Hamid, director of food crop protection at the ministry, told a media discussion on food security.

The ministry's forecast is also bigger than Indonesia's statistics agency's second of three annual forecasts of 62.56 million tonnes made in July.

Wasiati, however, said she believed the statistics agency would also revise up its forecast in its third forecast to be published in November.

She said the bullish estimate was based on the ministry's findings that planted areas were bigger than previously anticipated.

The rice was also getting sufficient rainfalls despite initial fears over the impact of the El Nino dry weather pattern, she said.

A better harvest will help Southeast Asia's biggest economy to freeze rice imports for the second consecutive year.

Indonesia is scaling back rice imports after it posted last year a surplus of over 1.6 million tonnes, the first in nearly two decades.

Wasiati said with a bumper harvest this year, Indonesia could make large scale exports next year compared with only around 100,000 tonnes estimated for this year.

Egypt sets new rules for rice exports

Egypt's Trade Ministry said on Tuesday it will hold monthly tenders to
grant rice export licences to traders and will reconsider the value of
its rice export tariff.

"The minister will set the rules to regulate the new system that will
include how to apply for these tenders and which authority will
supervise them," a ministry statement said.

The statement did not give further details about the new value of the
rice export tariff. Egypt had doubled the figure to 2,000 Egyptian
pounds a tonne in July.

The ministry also said it will announce a tender next week to export
100,000 tonnes of rice for shipment during December.

The new rules will also include a limit on the quantity of rice each
exporter will be able to sell in the tender to guarantee that the
maximum number of traders benefit, the statement said.

Egypt imposed an export ban in March last year to control the rising
cost of basic commodities. The ministry has said the ban will remain in
effect until October 2010.

However, a system created in February allowed exporters to sell their
rice abroad if they delivered the same amount of rice to the state grain
buyer in tenders.

This created a market for rice export licences, as some traders who did
not export sold the licences they obtained in tenders to exporters.

Local prices tumbled as a result, as traders bid low in state tenders so
they could secure licences to sell on.

The new system announced on Tuesday de-links state rice tenders from the
export system as exporters are no longer required to sell their rice to
the state to gain a license.

The framework, "insures that the Egyptian citizen can get his rice needs
at low prices....and at the same time maintains the capacity of rice
mills and encourages them to continue their activities," Minister Rachid
Mohamed Rachid said in the statement.

Egyptian rice millers have complained that the fall in local rice prices
caused by the export ban and the system of linking exports to state
purchases left them with heavy losses.

Egypt's export ban is part of a wider policy to discourage its farmers
from growing rice in order to save water.

A member of the agricultural export council has said there were plans to
cut the area planted with rice by about a third to 1.1 million feddans
(462,000 hectares) in the 2010/2011 season.

Egypt has a water supply of about 860 cubic metres per person per year,
well below the water poverty line of 1,000 cubic metres per person a
year, with agriculture consuming more than 80 percent of total water supply.

Philippines orders rice imports as typhoon costs mount

The Philippines ordered imports of 250,000 tons of rice on Monday and lawmakers rushed to approve funding for immediate rebuilding of farms and roads badly damaged by two typhoons that killed over 650 people.

The Philippines, the world's biggest rice buyer, would hold a tender two months earlier than normal on October 30 for the shipment of the grain, which it wants delivered between January and April, the National Food Authority said.

The typhoons hit the country's main rice-growing areas in the north of Luzon island, destroying 560,000 tons of yet-to-be harvested paddy, or 8.6 percent of the projected fourth quarter output of 6.5 million tons, the agriculture department said.

Agriculture Secretary Arthur Yap said the storms had damaged nearly 12 billion pesos ($257 million) worth of crops and fisheries but insisted there was no immediate shortage of rice, the national staple.

"Be assured that for 2009, our food security is intact, it (rice) is in place, it is already in the warehouses of the NFA," Yap said in a TV interview. "For the coming year, we are preparing for the import arrival and schedule."

Officials have previously said the Philippines was looking at importing around 2 million tons of the grain for its 2010 needs following hefty crop losses due to the storms.

That volume is up nearly 13 percent from this year's imports of 1.775 million tons, the bulk of which was supplied by Vietnam via an intergovernment deal.

Officials have said damage to roads and bridges from the storms could reach 4.77 billion pesos.

BUDGET DEBATE

Both chambers of Congress were scheduled on Monday to take up a proposal setting aside 10 billion pesos ($214.5 million) for relief work, and lawmakers said the measure could be approved this week.

Under debate is whether the funds for rehabilitation need a separate budget or a mere re-allocation of the current 2009 budget, and Finance Secretary Margarito Teves said the government was prepared for more foreign debt issues to fund possible extra spending this year.

Officials are also considering a possible $1 billion rehabilitation plan for typhoon-hit areas to be funded mostly by foreign aid, Joey Salceda, economic adviser to the president said on Sunday.

Typhoon Ketsana on Sept 26 inundated areas in and around Metro Manila, killed 337 people and forced nearly half a million people from their homes, the national disaster agency has said.

Typhoon Parma, which battered the northern Philippines for over a week, flooded vast areas in the rice-growing provinces of northern Luzon and killed 314 people in landslides and drownings, rescue officials have said.

Typhoons force Phililppines to begin 2010 rice imports this month

THE GOVERNMENT will kick off its rice purchases for next year two months
earlier than usual after typhoon lashed crops, with a tender for the
purchase of 250,000 metric tons (MT) of rice planned for later this month.

The National Food Authority (NFA), which normally holds its first rice
tender in December, will hold the tender on Oct. 30. The government has
set aside P6.366 billion for the purchase of 25% broken long grain white
rice, at $530.50 per MT. Thai benchmark prices remained stable at an
average of $535/MT late last week.

"We want to maintain stability of prices and stocks," Rex C. Estoperez,
director for public affairs of the NFA, said yesterday in a phone
interview.

"We are doing it earlier than the usual December [buying] because we do
not know if our inventory will be secure [early next year]," he said in
Filipino.

Rising rice price for the end of 2009?

While the Vietnam Food Association (VFA) believes that rice prices will continue rising towards the end of 2009, economic analysts say that the price increase may not happen.

According to VFA, by the end of September 2009, Vietnam exported nearly 5 million tonnes of rice, reaping a record $2.018 billion. VFA Chairman Truong Thanh Phong stated that Vietnam’s rice is going for a good price, forecasting that the price would move up further in the latter months of 2009.

 

Nevertheless, signs in the world market do not show such bright prospects, according to Saigon Tiep Thi.

 

Economists believe that it is very likely that Thailand, the world’s biggest rice exporter, will push up rice exports from now through the end of the year. Such a move would make the global rice price plummet.

 

Thailand’s rice exports thus far for 2009 are reportedly lower by 200,000 tonnes per month. To fulfill their rice export target, the country will have to flood the world market with nearly 210,000 tonnes of rice per week, an increase of 21.7 percent over the same period of 2008.

 

The chairman of the Thai Rice Exporters’ Association has stated that the rice export volume of the country would be not just 8.5 million tonnes, but would reach 8.7 or even 9 million tonnes.

 

The Government of Thailand has also applied a new policy on rice export management. The Government will not be the main buyer of rice on the Thai market anymore. In other words, instead of regulating and limiting rice exports, the Government of Thailand now wants to boost exports.

 

Because of these two factors, the Chairman of the Thai Rice Exporter’s Association has predicted that, with good weather, Thai rice prices may drop to $380-400 per tonne by the end of the year due to the increasing supply.

 

Moreover, other rice exporters who have been encouraged by the prolonged rice fever, have been pushing up rice production, which has led to the increased rice export volume.

 

Myanmar, for example, increased their rice export volume from 31,000  tonnes in 2007 to 541,000 tonnes in 2008 and is targeting one million tonnes for 2009.

 

 

Similarly, Cambodia, which exported 500,000 tonnes in 2008, is planning to export 800,000 tonnes this year.

 

Additionally, while the supply increases, demand remains unchanged, leading to the prediction that rice stocks on the world market will increase by 10.3 million tonnes to 90.7 milion tonnes, a record high for the last six years.

 

The Philippines, a big rice importer in the last several years, has been stricken continuously by typhoons and is expected to reduce its rice imports by 400,000 tonnes from the previously projected 2.4 million tonnes.

Jan-Sep Vietnam rice exports up in volume, down in value

Vietnam shipped 4.98 million tons of rice in the first nine months this year, a 40-percent year-on-year increase.

The Vietnam Food Association (VFA) said, however, that export revenues of US$2 billion marked a 6.2 percent decline in value against the same period last year.

VFA expects rice firms to ship an additional 1.2 million tons of rice in the final quarter of this year, taking total exports this year to a record setting 6-6.2 million tons.

As of September 30, export contracts totaling 5.8 million tons had been signed, according to VFA.

Vietnam’s main export markets are Indonesia, the Philippines, Cuba and Iraq. The country’s rice exports to Africa and the Middle East have risen significantly this year, the association said.

Rice exporters have delivered 1.4 million tons to Africa and 250,000 tons to the Middle East in the first nine months of the year, an increase of 98 percent and 65 percent against the same period last year, respectively,

Global rice prices may shoot up

Global rice prices may shoot up due to decrease in reserves and
reduction in rice production in India.

According to analysts, increase in demand could reduce the reserves from
30 millions ton to 20 millions ton in Thailand, Vietnam, America, India
and Pakistan till end of this year.

UN food experts said price hike could reduce five big reserves of the
world to one third during next five year.

Pakistan eyes rice sales to Africa; keen on Iraq

Pakistan expects to ship up to 300,000 tonnes of parboiled rice to Africa in the current financial year on firm demand and will participate in another rice tender in Iraq, an industry official said on Thursday. "We are looking at around 300,000 tonnes going out from Pakistan to Africa in 2009/10," Safder Mehkri, chief executive of Conwill Pakistan Pvt Ltd, told Reuters in an interview on the sidelines of a rice conference.

That compared to just 30,000 tonnes in 2008/09, he said, adding the first shipment is slated this month bound for Nigeria. The world's fifth-largest rice exporter, Pakistan is targeting to export around 3 million tonnes of rice in the current year to June 2010, versus 2.95 million tonnes in the previous financial year.

"We don't see India coming into the export market, Vietnam would take another year or two to come out as a parboiled player. The only player today in the world is Thailand which is very highly priced. So Pakistan has a very good advantage," said Mehkri, also a member of the managing committee of the Rice Exporters Association of Pakistan.

Pakistan is also keen on joining a possible tender in Iraq after winning a previous one two weeks ago to supply 25,000 tonnes rice. "There is talk that Iraq is coming out in a week's time with a tender, but we don't know for sure whether that's happening or not. Pakistan will be there definitely," said Mehkri.

He said Iraq tendered for 60,000 tonnes rice at a recent tender and ended up awarding about 120,000 tonnes, with the rest taken up by Vietnam and Thailand. Prolonged water shortages are expected to stifle rice production in Iraq this year, forcing one of the world's top grain importers to buy even more abroad. Vietnam has said it will participate in an Iraqi rice tender for 500,000 tonnes of rice. Pakistan will only bid for up to 75,000 tonnes, said Mehkri, if shipment is due between December and February, because it is also waiting for demand from other importers like the Philippines.

Rogers Says Rice to Climb as FAO Sees Stockpile Drop

Declining global rice stockpiles and lower production in India will push
prices higher, said investor Jim Rogers, chairman of Rogers Holdings.

"The world is very vulnerable to production problems," Rogers, who
predicted the start of commodities rally in 1999, said in an interview.
"We're already seeing it in India. That's going to mean higher prices
somewhere along the line."

Rice stockpiles of the world's five largest exporters are forecast to
plunge by a third to the lowest level in five years, and below last year
when prices surged, Concepcion Calpe, senior economist at the United
Nations Food and Agriculture Organization, said at a conference in Bali
today.

Global rice prices soared to a record $25.07 per 100 pounds in April
2008 on declining inventories, sparking concern over a global food
crisis. This prompted exporters including India and Vietnam to curb
sales, cutting supplies for countries like the Philippines, the biggest
importer. Prices almost halved since then as farmers boosted production,
replenishing stockpiles.

The contract for November delivery jumped 1.9 percent to $13.48 per 100
pounds yesterday on the Chicago Board of Trade, the steepest gain since
Aug. 31, and was little changed at $13.495 at 2:42 p.m. in Singapore.

Total stockpiles held by Thailand, Vietnam, the U.S., Pakistan and India
will fall to about 20 million metric tons at the end of the marketing
year on Sept. 30, from 30 million tons a year earlier, on
lower-than-forecast crops and rising demand for imports, Calpe said today.

Drought, Flood

The weakest monsoon in India since 1972 may cut the nation's rice
production by about 18 percent in the marketing year that began Oct. 1,
Calpe said in an interview Oct. 7.

Floods now affecting the south of India will also reduce production,
Junior Food Minister K.V. Thomas said Oct. 6. The flooding will cut
production by at least 3 million tons, the Hindu Business Line reported
today, citing N. Raghuveera Reddy, state farm minister for Andhra Pradesh.

The last time stockpiles of the five largest exporters fell by a third
was in 2002-2003, when India "had a bad monsoon, and prices then were
low," Calpe said. Rough rice futures on the Chicago Board of Trade
reached a low of $3.52 in April 2002.

Tropical Storm Ketsana and Typhoon Parma destroyed at least 7 percent of
the Philippines fourth-quarter crop in the past week and wiped out
inventories in parts of the country. The Philippines may import 2
million tons of rice in 2010 to cover losses from the storms, National
Food Authority Assistant Administrator Jose Cordero, said in an
interview in Bali today.

Shelving Exports

Indonesia state food company Bulog said Oct. 6 the country may shelve
plans for its biggest rice exports in at least 50 years if dry weather
caused by El Nino causes production to miss a state forecast of 40
million tons.

Rice production in Pakistan, the world's fourth-largest exporter, is
forecast to drop 4.8 percent this year from a year ago, Safder Hussain
Mekhri, a vice-chairman with the Rice Exporters Association of Pakistan,
which accounts for about 95 percent of the nation's shipments, said in
an interview.

Output may drop to 6 million tons this year from 6.3 million tons last
year, he said, while exports may be little changed at 3.1 million tons,
Mekhri said.

"Supply is going to get tighter," Rogers said in an interview late
yesterday. "Production is going down for a variety of reasons. Many
farmers cannot get loans," limiting their ability to raise yield and
expand acreage, he said.

El Nino

Higher reserves in China, the world's largest grower and consumer, may
help slow the decline in total global stockpiles to 3 percent to 117.4
million tons, Calpe said.

Still, "we've not considered the flooding in the Philippines and El Nino
in Indonesia because we did the estimate on Sept. 25," Calpe said. "Next
year, if there's a bad year, then things are going to be more serious
because then we'd have to work from much lower stocks."

The impact of El Nino, which can delay rains in Asia and cause flooding
in South America, may also push global production lower next year,
forcing affected countries to draw down inventories, she said.

"Indonesia is especially at risk and Australia of course," Calpe said,
referring to El Nino. The weather phenomenon may also lower yields in
South America "because if it's cloudy, they won't get the proper sun and
that's very important for yields."

Typhoon Damage

While the slump in Indian production will drag total volume down, not
all of the major exporters will see output and stockpiles drop, Calpe said.

Rice production in Vietnam, the world's second-largest exporter, may
climb to a record of between 37.9 million tons and 38.3 million tons in
2010, Pham Van Du, deputy director general of Vietnam's Crop Production
Department, said yesterday.

Typhoon Ketsana destroyed at least 100,000 tons of the Vietnamese rice
crop, Pham said in an interview in Bali today. The losses are unlikely
to lower significantly the nation's rice output, he said. Production is
forecast to reach a record 37 million tons this year, the USDA said in a
report this week.

"At the moment, there is no evidence of supply shortages in the market,"
Calpe said Oct. 7, adding that last year's record prices were "not
really triggered by shortages, it was an overreaction by governments and
the market."

Philippines May Import 2 Million Tons Rice in 2010, NFA Says

The Philippines may import 2 million metric tons of rice in 2010 after
losses caused by storms, National Food Authority Assistant Administrator
Jose Cordero said in an interview.

The country will decide the amount of purchases after reviewing damage
and will try to avoid disturbing the market with tenders for large
amounts, Cordero said. The nation is considering tenders and government
transactions and may start talks by December, he said.

Thailand, Vietnam eye RP rice exports

Rice imports by the Philippines, the world's top buyer, may climb 13
percent next year after typhoons damaged the crop, prompting Vietnam and
Thailand to start talks early to grab a piece of the action.

While Thailand, after missing the boat this year, has started
discussions to supply Manila with 500,000 tonnes annually from next
year, Vietnam is hopeful of another government-to-government deal in
2010, after supplying the bulk of their needs this year. A rise in
Manila's purchases could lift Thai rice prices , seen as the benchmark
for the market, from the current $535 a tonne, but it is unlikely to
take them anywhere close to the record high of $1,080 per tonne seen at
the height of a panic over food security in April 2008.

Agriculture undersecretary Bernardo Fondevilla said in Manila that rice
imports for 2010 would hit 2 million tonnes.

The Philippines has imported 1.775 million tonnes of milled rice this
year, the bulk of it from Vietnam, versus a record 2.3 million tonnes in
2008.

Chookiat Ophaswongse, president of the Thai Rice Exporters Association,
told Reuters the country was in talks to supply the Philippines with
500,000 tonnes of milled rice a year, as it aims to boost shipments to
10 million tonnes next year.

But Manila is only willing to agree to a smaller initial 200,000-tonne
deal, Chookiat said.

''The Thai government wants to make it like 500,000 tonnes annually, and
the Philippines commented that it may reduce the figure to 200,000
tonnes, so it's still a back and forth,'' Chookiat said on the sidelines
of a rice conference on the island of Bali.

Thailand sold more than 500,000 tonnes of rice to the Philippines in
2008, but shipments this year dwindled to 80,000 tonnes, he added.

VIETNAM HOPEFUL

Pham Van Du, deputy director general at Vietnam's Ministry of
Agriculture and Rural Development, told Reuters he was hopeful of
another government-to-government deal with Manila for the latter's 2010
requirements.

''I think they may continue under G-2-G (government-to-government)
because Vietnamese rice is good quality and low priced,'' said Du.

Vietnam's top-grade 5 percent broken grain stood at $395-$400 a tonne
this week, free-on-board basis, versus $390-$400 last week.

The world's second-biggest rice exporter, Vietnam is looking to export 6
million tonnes of the grain in 2010, he said.

The country has contracted 5.8 million tonnes so far this year and is in
discussions for further shipments that could take 2009 exports to a
record 6.3 million tonnes, up about 35 percent from last year.

''Production may be the same, so we may export about 6 million tonnes
for 2010,'' Du added.

Vietnam is forecast to produce 23.8 million tonnes of milled rice for
the 2009/2010 marketing year, up 0.4 percent from the previous period,
according to the US Department of Agriculture.

Typhoon Ketsana, which killed nearly 300 people in the Philippines and
38 in Vietnam, had largely spared the main rice-growing region in
southern Vietnam, said Du.

Typhoon damaged 40,000 hectares of Vietnam rice

Typhoon Ketsana damaged 70,000 hectares of land planted to food crops in
central Vietnam, including rice, hurting production in the world's
second-largest exporter of the grain, a government official said Friday.

Initial estimates showed at least 100,000 metric tons of rice was lost
from 40,000 hectares of crops hit by the typhoon, Pham Van Du,
deputy-director general of Vietnam's Department of Crop Production, said
in an interview in Bali.

Still, the losses are unlikely to lower significantly the nation's rice
output this year, he said.

Rice production in Vietnam, the world's second-largest exporter, may
climb to a record 37 million tons this year, on improved yields and
expanded acreage, the US Department of Agriculture said in a report this
week.

The typhoon also damaged 20,000 hectares of land planted to corn and
sugarcane, Pham said, without providing estimates of the impact on
production.

Vietnam expects record export sales

Exporters have shipped 4.9 million tonnes of rice worth more than US$2
billion in the first nine months of the year, an increase of 40 per cent
in volume and reduction of 6.2 per cent in value against the same period
last year, the Viet Nam Food Association (VFA) reported on Wednesday.

The VFA estimated that rice exporters would ship an additional 1.2
million of rice in the fourth quarter of this year, taking total exports
this year to 6-6.2 million tonnes, a record level.

As of Wednesday, Vietnamese exporters had signed contracts to export a
total of 6 million tonnes of rice this year.

Nguyen Tho Tri, VFA's deputy chairman, said the prices of Vietnamese
export rice were increasing by $30 a tonne compared to last month.

Tri said VFA and its member companies were negotiating with importers to
sign large contracts that could be signed by the year-end.

Viet Nam's main export markets are Indonesia, the Philippines, Cuba and
Iraq.

This year, rice exports to Africa and the Middle East have increased
significantly.

Rice exporters have delivered 1.4 million tonnes to Africa and 250,000
tonnes to the Middle East in the first nine months of the year, an
increase of 98 per cent and 65 per cent against the same period last
year, respectively.

The VFA also reported that its member companies had bought 380,000
tonnes of 500,000 tonnes of rice after the Government last month ordered
the VFA to purchase part of the summer-autumn rice crop to ensure stable
prices.

The VFA's member companies will complete the purchase of 500,000 tonnes
of rice by November 20.

In early August, the association members also purchased 490,000 tonnes
of rice from Mekong Delta farmers to stabilise rice prices when the
delta was entering its peak harvest of the summer-autumn crop.

The Delta, the country's rice granary, has harvested about 2 million
tonnes of rice in the summer-autumn crop, according to the Ministry of
Agriculture and Rural Development.

No more light on Vinafood2 dumping charge

Contrary to charges in a widely noted Tien Phong newspaper expose, the
Southern Region Food Corporation, commonly referred to as Vinafood 2,
did not break Vietnam Food Association rules on rice export pricing, a
VFA deputy chairman assured the press on October 7.

Vinafood 2 is a state-owned enterprise that in 2008 reported earnings of
over $2 billion from rice exports alone. Its CEO, Truong Thanh Phong, is
also the current head of VFA.

Nguyen Tho Tri, the VFA executive, said a misunderstanding occurred
because VFA did not update information on the rice floor price on its
website. That made it seem that its biggest member was selling below the
permissible minimum price. In fact, Tri said, when Vinafood 2 and three
provincial rice companies agreed to export rice at just over $400 per
ton in August, they were in accord with VFA guidance posted late in July.

Tri said also that prior to July 13, 2009, the floor price was
'flexible.' This means that though VFA set a floor price, enterprises
still could sell rice to foreign customers for less 'if the export deals
were reasonable.' Enterprises were expected to clear such deals through
VFA. "Therefore, even though the floor price was set at $410 per tonne,
enterprises still could sell rice at below the price if they could
persuade VFA," Tri said.

Tri's explanation has not been accepted by rice exporters in Mekong
Delta. Tuoi tre newspaper quotes some rice exporters as saying that they
never receive an official notice of minimum sales prices from VFA. "It's
always oral," one said, "and the mechanism for adjusting it is really
obscure. Whatever VFA sets up must be respected by all enterprises. How
dare Tri say that those who can 'persuade' VFA will be able to export
rice at any price?"

Other businesses asked why VFA keeps adjusting the floor price for rice
exports when Vietnam's rice price is always the lowest and Vietnam does
not have rivals in the lower end of the white rice market.

What's the role of Saigon Food?

The VFA executive also defended Vinafood 2's sale of rice via a
Singapore subsidiary, the "Saigon Food Co." Vinafood 2 set up Saigon
Food under the Government's development strategy and with the approval
by the Ministry of Planning and Investment, Tri said. It's a 100 percent
state-owned firm with investment capital of $800,000.

Local newspapers, led by Tien Phong, have pounced on evidence that
Vinafood 2 on August 26 sold rice cheaply to Saigon Food, which then
immediately cut an export deal with an African buyer for an undisclosed
price. The $2 million consignment, purchased by Saigon Food for $406 per
tonne, left Ben Nghe Port in HCM City City on August 27.

Tri said that the thing that needs to be clarified here is that Vinafood
2 did not sell rice for less than the floor price. There's no need to
clarify why Vinafood 2 did not sell directly to the African party. In
many cases, Tri emphasized, a Singaporean company will have better
advantages in negotiating with the partners than a Vietnamese company would.

Other rice exporters scoff at this explanation too. Requesting
anonymity, one businessman said that Vinafood 2 does not need to market
through a subsidiary, Vinafood 2 itself is been well know as a big
exporter able to make direct transactions with foreign partners.

"The act of setting up a subsidiary abroad makes everyone think that
this is a way of earning illegal profits," he said.

Official sources promise investigations

Tuoi Tre newspaper asked a deputy minister of trade, Nguyen Thanh Bien,
his thoughts on the matter. "It's quite normal for a parent corporation
to sell products to a subsidiary," Bien said; "this is not illegal. The
worry here is that the parent company deliberately sold rice at the
floor price to its subsidiary, so that the subsidiary could resell to
the actual buyers at a lower-than-floor price. This may badly affect our
rice exports, as foreign partners may make corrupt use of this to force
Vietnam's rice price down.

"We will examine and clarify the case. If enterprises violate the
current regulations, they must be punished."

Tien Phong, meanwhile, queried Le Quoc Dung, a deputy Chairman of
National Assembly's Economics Committee. "I think," he said, that we
need to discuss whether it's a good idea to let the General Director of
Vinafood 2 also serve as Chairman of VFA. Economist Le Dang Doanh is
right; this issue should be discussed when the National Assembly meets
later this month.

Thailand to Export Rice to Philippines

The Thai Rice Exporters Association is in talks with the government of
the Philippines about the possibility of increasing the export of Thai
rice to the Philippines.

President of the Thai Rice Exporters Association Chookiat Ophaswongse,
said the association is currently talking with the government of the
Philippines about an agreement to export 500,000 tons of Thai rice.

At present, the government of the Philipines has agreed to buy 200,000
tons of Thai rice.

The talks took place after the government of the Philippines stated they
aim to import 10 million tons of rice during the next year, following a
severe flood. A new prediction states that the scarcity of rice will be
more severe than earlier expected, possibly by as much as 1.14 million tons.

Chookiat revealed that the prospect of rice export during the next year
looks promising for Thailand, as India cannot export rice due to
increased domestic consumption.

This increase in rice exports is in line with economic recovery.

However, the price of Thai rice is expected to decrease to 500-520 US
dollars per ton as a new lot of rice enters the market.

Meanwhile, an economist from the Food and Agriculture Organization of
the United Nations stated that India's rice production will decrease by
18 per cent this year due to drought.

The decrease may affect global demand for rice as India is the second
biggest rice grower in the world, and added that if the drought
continues, the rice cultivation will be affected and the drought will
also impact India's rice export next year.

Thailand Rice insurance scheme delayed

The government's first rice insurance scheme hit a snag, as many farmers
are concerned over their eligibility and have yet to fully understand
the process.

A joint meeting between Commerce Minister Porntiva Nakasai and
representatives of farmers, millers and exporters decided Friday to put
off the scheme until Nov 1 instead of this month.

"Most farmers are not confident they will be entitled to the new rice
price insurance scheme, particularly the requirement that calls for
farmers' paddy to contain a ceiling of 15% moisture,'' said Prasit
Boonchoey, president of the Thai Farmers Association.

"Most farmers' paddy contains more than 15% moisture, so we want the
government to ease this requirement.''

Most farmers exceeded the moisture limit because of an overly rainy
season and a lack of equipment to dry the rice.

According to Mr Prasit, a majority of farmers are concerned over their
eligibility for the scheme, as up to 70-75% of Thai farmers rent
farmland to grow rice.

At the meeting, Mrs Porntiva was non-committal about the farmers'
proposal, but instead asked the millers to buy rice from the farmers at
a fair price with the government pledging to compensate them for
interest rates of up to 3% on their loans.

For the country's 2009-10 main crop season starting in November,
insurance prices under the scheme for Hom Mali paddy have been set at
15,300 baht per tonne. Prices for general provincial fragrant rice were
set at 14,300 baht, glutinous paddy at 9,500 baht and second-crop paddy
at 10,000 baht.

The benchmark is 10,000 baht per tonne for 15%-moisture white rice
paddy. Farmers' production costs are estimated at 6,000 to 7,000 baht
per rai for white rice and 11,096 baht for Thai Hom Mali. The buying
price covers all costs and allows around a 30-40% profit.

The government will guarantee the prices quoted. If farmers sell to
millers or exporters for less, the government will pay them the difference.

The Commerce Ministry will announce reference prices every 15 days to
allow farmers to evaluate whether to sell their products.

No official word from Iran on rice issue

Amid the anticipation that Iran has banned the basmati rice from India
after detecting contamination, India's agriculture body said it has not
received any official communication from Iran over the issue.

According to A K Gupta, an advisor to India's Agriculture & Processed
Food Products Export Development Authority (APEDA), the country has
nothing official from Iranian authority in this regard except the media
reports that widely circulated.

Indian exporters said that there was not any obstacle in the shipment
and the exports are going well as per consignment to Iran.

Iran's Press TV reported that the government laboratory has allegedly
found the presence arsenic, cadmium and lead in India's premium basmati
rice Pusa 1121. Pusa 1121, which was formerly sold as premium
non-basmati rice, was re-branded as basmati in October 2008 by India to
boost its marketability.

India's APEDA has sent a proposal through Indian Embassy in Iran
inviting a delegation from the country to showcase the processes
involved in production of the premium grain, Gupta said.

Out of Asia Brazil Becomes World's Top Rice Consumer and Producer

Brazilian exports of rice from March to August totaled 560,000 tons. The
result is equivalent to 93% of the initial forecast of the National Food
Supply Company (Conab), according to which foreign sales should total
600,000 tons of rice by February 2010. Presently, Brazil exports to 56
countries.

According to the technician for planning at the Conab, Regina Santos,
the export result is very positive for the sector, because there are
still six months left before the end of the business year.

"We should exceed the initial forecast. As for imports, there should be
a reduction, because the estimate was that we would purchase 800,000
tons by February 2010, and up until July we have only imported 347,000
tons, which is good for Brazil," she says.

Brazil is currently the leading producer and consumer of rice in the
world, not counting the Asian continent. The Brazilian product started
gaining renown in the foreign market last year, when India, the third
largest exporter of the grain, withdrew its product from the market in
order to curb local inflation in food prices.

According to Regina, imports by Russia, the United Kingdom and Africa,
the continent with the strongest demand for rice in the world, are the
driving forces behind the good results in Brazilian exports of the product.

African countries are the leading destination of Brazil sales, and
account for 75% of the country's exports. However, targets such as Saudi
Arabia and the United Arab Emirates, to which Brazil exported for the
first time this year, are starting to gain weight in Brazilian sales.

To the market advisor of the Rice Institute of the State of Rio Grande
do Sul (Irga), Marco Aurélio Tavares, the performance of rice exports in
the first half of the business year will be crucial for reducing surplus
production in the state of Rio Grande do Sul, which should produce 7.9
million tons of the grain. Foreign sales also result in better earnings
for farmers, thus encouraging new investment.

"From March to August, the United States and the Asian countries were in
the period between crops, which is already over," explains the advisor.
"Competition will be much more fierce from now on, but still we believe
that we may export another 200,000 tons or so before the business year
ends," says Tavares.

Vietnam food firm ties up with Cambodian partner for EU export

The Southern Food Company (Vinafood 2) has set up a joint stock company with a Cambodian firm to process and export rice to the European Union to take advantage of the tax exemption the EU has offered to Cambodia from September 1.
 

The EU has classified Cambodia in a list of the world's 49 poorest countries and waived tariffs on its exports to block members.
The new joint stock company, Cavifoods, has a capital of US$17 million.
Last year Vinafood 2 set up Saigon Food (Pte.Ltd) in Singapore to capitalize on the advantages Singaporean firms in negotiations with companies around the world, especially in Africa.
The Vietnam Food Association also said that it is determined to keep rice export prices at not lower than $400 per ton. Since the beginning of the year foreign buyers have pressured Vietnamese companies to lower prices to up to $360.
Undercutting by Vietnamese exporters has helped the buyers as the exporters regularly negotiate with them to sell the grain at prices lower than regulated by the association.
At the beginning of this month foreign importers agreed to a price of $400.
In the first nine months Vietnam exported 4.975 million tons worth $2.2 billion.
It has signed deals to export 5.798 million tons this year, with high-quality rice making up 38 percent of this, a 78 percent increase over last year.
The major markets are Asia -- including the Middle East -- who account for 61.3 percent of the exports, followed by Africa with 27.7 percent.

Price Guarantee vs. Rice Pledging in Thailand explained

In the rice pledging scheme, the government announces the price at which farmers can pawn their rice after the rice has been grown and is in the cultivation period. Farmers can then take their rice to the government, who then stores the rice in silos to be sold later (I'll explain why in a little bit).

Meanwhile, in the price guarantee scheme, the government announces a price that the State guarantee to buy the rice at, before any planting is initiated. Thereafter, a reference price is announced every 15 days, according to various factors. In whichever 15-day interval the farmer's sales of their products fall, the government will pay the difference between the reference price and the guaranteed price if the reference price is lower.

For example, say the guaranteed price at 100 baht per sack. If the farmer sells in one particular period during which the reference price is announced to be at 80 baht per sack, the government will pay 20 baht per sack.

Apart from the difference in timing, the other obvious difference is that there is no burden for the government to store the rice at all.

The truth of the matter is, both the schemes are good in some ways; Both are beneficial to the agricultural sector. On one end, pledging takes supply out of the market to drive the price higher, given demand remains constant. On the other end, the price guarantee scheme can encourage higher quality rice, as the government can pick and choose to support only high-quality species.

This one particular advantage of the price guarantee scheme addresses the problems that the pledging scheme had caused. The pledging scheme basically told farmers that no matter what they grow, the State would buy it if no one else does. On top of that, the State is always pressured to buy at a price equivalent to or higher than the market price, which is why the State is like the middleman that buys at a higher price than they could ever sell. The State holds the rice waiting for the price to rise, as the rice's quality deteriorates. It doesn't make sense.

So with that, the farmers do what make sense. They produced as much as they could to sell as much as possible without regards to the quality of the rice. In other words, the pledging scheme encourages the production of poorer species of rice, hence we face issues in competing with other suppliers in the market. The result is billions of baht being handed out to the farmers for products that end up rotting in the silos.

In concept, if the government buys the rice from the farmers at a price lower than that of the market, the government wouldn't lose money. In fact, they may make some profit. The key is that there should be constant effort to sell the rice, insteading of waiting to dump the rice once they rot. Professionalism and honesty are especially essential to this scheme. We can't be having those involved in using the State funds to buy the rice and setting the price at which to buy, be the same ones growing and selling the rice themselves. They'd obviously set a high price to buy their own products with the State's money.

The price guarantee scheme has the same potential of working well, but only if it is implemented appropriately. Apart from encouraging higher quality of rice, supply can also be controlled as higher quality rice takes time to grow. Thus, farmers won't be able to rely on the quickly-but-badly grown rice which oftens flood the market.

One thing that could possibly prove the price guarantee scheme to be disasterous is if the market price falls below the reference price. We must note that the two are completely different. In the event that supply is heavily increased, the market price can suddenly and dramatically fall below the reference price. The problem is the State is only prepared to pay the difference between the guarantee price and reference price. Remember the 100 and 80 example? The farmer would get only 20 baht per sack in compensation in any event even if they end up selling at 60 or 50 baht per sack.

Supply can be increased all of a sudden with new competitors in the market which is why the Jazzman species in the US is worrying the Thai Jasmine rice farmers so much.

Anyhow, there is always a way out, and it may not be all that complicated. In the event that the price guarantee scheme doesn't do as well in driving the price up, the rice pledging scheme should be used to pull supply off the market to help drive the market price up to the reference price. In concept, these two schemes could very well complement each other.