The Price of Rice: A case study exhibiting just how important rice is to the world both socially and economically.

How it affects us:
All across the world rice is an important food staple. In Asia it is not only 70-80 percent of the average person's calorie intake but also plays a huge roll in their culture. In places like Egypt, Yemen, and Tunisia rice plays a more political roll. Its rise in price has contributed to its unrest. In fact, one Egyptian protester said this (through a translator), "We are tired, ma'am. We are tired. Stop the price hikes. We are suffering. We are Egyptians. We love Egypt. But stop this. We want to eat. We want to live, we and our children." Here in the US this could almost go unnoticed because our diets are less grain based and most of our food prices have already been driven up advertisements. Here is a good example from NPR's Chris Arnold, "...If you buy a can of Wolfgang Puck corn chowder, the price of corn is obviously just a tiny amount of the cost of putting that food on the shelf. There's a lot more money spent on advertising and packaging. But in developing countries, where people buy a burlap sack full of cornmeal or flour to feed their families, spikes in food prices are felt much more." This is true for rice as well.17

Why the prices are being driven up:
This year, in January, global food prices were the highest they have been in 20 years. And this has forced around 44 million people into a poverty-stricken state that has stopped many from buying enough food when the estimated number of undernourished people is already about 925 million. So, what caused this peak in costs? More specifically, what drove sellers of rice to ask for more? Well, there is not just one answer. There is always mother-nature who caused major flooding in Pakistan and Australia. She also severely flooded Sri Lanka ruining about 30% of the countries' crops. Not helping the depleting food supply that drives costs up and up, and makes the stock market go nuts.19
Then, there is fear. A fear that something like the “great rice crisis of 2008” will happen once again and no one will see it coming.  Here’s what happened. In 2008 all was going well in the world of rice, but then the Indians made a decision, a reasonable decision, but for many, a life changing one. The decision was meant to be a thrifty solution to a rise in wheat prices that made it unaffordable to buy large amounts of wheat for food distribution. India simply bought enough rice to cover all distribution and no wheat. Then, to make sure rice stayed the same price, and was always on hand, they banned all rice exports. This had a disastrous effect in places like the Philippines where they do not produce enough rice to fulfill all of their rice needs. This didn’t just affect the Philippines, though, many other countries started to stockpile their rice so they wouldn’t run out and pay the now outrageous prices. This caused the Philippines to not have enough rice because it had now stopped coming into their country, rice trade was at a standstill.  So their government told their citizens to eat less rice but their plan backfired when people did as the government did. They went and bought as much rice as they could. One of the largest rice markets in the world was sold out within two days. Now, by this time, the world markets had gone wild. In the first four months of 2008 one ton of rice went from $300 dollars to $1,200 and the craziest part is that there was still enough rice for everyone. It just wasn’t moving around because governments didn’t want shortages in their countries. To fix this Peter Timmer and Tom Slayton, American economists, got congress to give Japan the okay to export tons of rice to the Philippines. The reason Japan didn’t mind? The WTO, or World Trading Organization, forces to import this rice from the USA and they don’t want it so they just leave it in warehouses until we tell them what to do with it. This solution to the rice crisis was good. So good, in fact, prices started to drop immediately.20

So now you see how the price of rice has global importance and how it affects and changes so many lives from day to day, month to month, and year to year.


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