April 9 (Bloomberg) -- The U.S. vowed to supply the Philippines, the biggest buyer of rice, with as much as it needs after some of the world's largest exporters cut sales to safeguard domestic supplies.
"You are assured absolutely," Kristie Kenney, ambassador to the Southeast Asian country, told reporters in Bataan province, west of Manila today. Philippine President Gloria Arroyo announced yesterday plans to purchase 1 million tons of the grain and said she would jail anyone found guilty of ``stealing rice from the people."
The U.S. will help the nation "weather the ups and downs of the world economy,: U.S. embassy spokeswoman Rebecca Thompson said in a telephone interview today. The Philippines is fighting Muslim separatists in the south of the country. The U.S. called its former colony "a front-line state in the war on terrorism" in a 2007 congressional research service report.
Rice, the staple food for half the world, has doubled in price in the past year as China, Egypt, Vietnam and India, representing more than a third of global shipments, reduced sales to secure domestic supplies. The price of the cereal in Chicago rose 1.7 percent today to $20.825 per 100 pounds, below the record $21.60 per 100 pounds yesterday.
"You might see another 10 or 20 percent move to the upside," said Vijay Iyengar, Singapore-based managing director of Agrocorp International Pte., a commodity trading company. "Prices will be sustainable."
More Shipments
The Philippine National Food Authority said today it may increase the amount of subsidized rice sold in Manila and the national police said they would increase their presence at markets and stores to deter outbreaks of violence.
The Southeast Asian nation may raise imports of milled rice by as much as 42 percent to 2.7 million tons this year from 1.9 million tons in 2007 to discourage speculation by local traders, Agriculture Secretary Arthur Yap said March 26.
The Philippines imported no milled rice from the U.S. in 2007, according to a USDA Foreign Agricultural Service report in February.
U.S. rice exports, the third largest behind those of Thailand and Vietnam, were forecast to jump 22 percent to 3.58 million tons in the year ended July 31, the U.S. Department of Agriculture said March 11.
Price Gains
The cost of rice exports from Vietnam may rise by as much as $200 per ton to $900 in the next two months because of world price gains and the end of the winter-spring crop, Truong Van Anh, director of Long An Food Co., said by telephone from the Mekong-Delta farming region today.
Commodity prices are posting their seventh year of gains. The UBS Bloomberg Constant Maturity Commodity Index of 26 raw materials more than tripled in the past six years as global demand led by China outpaced supplies of metals and crops.
Global food prices increased 57 percent last month from a year earlier, the United Nations Food and Agriculture Organization said on its Web site. The rise comes from higher meat and grain prices, including rice, corn and wheat, it noted.
``Food price trends are likely to increase sharply both the incidence and depth of food insecurity,'' John Holmes, United Nations under-secretary-general for Humanitarian Affairs, said in a speech in Dubai yesterday. "Price rises will also result in lower school attendance rates, poorer health care and asset depletion."
Poverty, Hunger
Soaring prices could lead to increased unrest, such as in Haiti recently, the United Nations said in a report April 7.
"What we see in Haiti is what we're seeing in many of our operations around the world -- rising prices that mean less food for the hungry," the report said, citing the United Nations World Food Program's executive director Josette Sheeran.
Burkina Faso, Cameroon, Egypt, Indonesia, Ivory Coast, Mauritania, Mozambique and Senegal have also experienced unrest in the last several weeks related to food and fuel prices, according to the report.
Rising food prices are making life tougher in North Korea, said Daniel Pinkston, a Seoul-based senior analyst and non-proliferation expert with the International Crisis Group.
In the spring the past few years, North Korea has asked South Korea for fertilizer and food assistance and this year they have not made this request, said Pinkston.
"I think they believe this would be a sign of weakness," he said. "The sad part of this story is that ultimately the North Korean people will pay the price, so we could see a looming food crisis coming later this year."
In Thailand, the world's biggest rice exporter, hypermarket operators will lower retail prices of the cereal between 3 percent and 10 percent next week to control inflation, the Bangkok Post reported.
Egypt's Soaring Food Prices Bring Bread Lines, Deficit Pressure
April 9 (Bloomberg) -- Atyat Musa Bakri, a Cairo mother of nine children, was waiting in line to buy subsidized bread for the third time in one day.
"The more cheap bread I can get, the better," she said as a crowd of about 30 women jostled at a bakery in the Boulaq district. "The price of everything is going up and up, so I save on this. I spend all morning buying cheap bread."
Bread is just about the only affordable food these days in Egypt, where rising commodity and energy prices have sent unsubsidized food prices up 20 percent or more in the past year. The rising cost of subsidies is damaging the government's efforts to reduce its budget deficit.
About 500 political activists and textile workers at the Mahallah El-Kobra factory in northern Egypt were arrested and dozens were wounded in clashes with police on April 6 as the government clamped down on a one-day national strike to protest food inflation. In Mahallah itself, demonstrators threw stones at police phalanxes and set fire to trash.
The government-owned Egyptian Gazette newspaper said April 1 that seven people have died since the beginning of the year in brawls in bread lines.
Egyptian inflation accelerated to 12.1 percent in February, the fastest pace in 11 months, the Cairo-based Central Agency for Public Mobilization and Statistics reported March 19. Food and beverage prices increased 16.8 percent, while non-subsidized bread and grain prices jumped 27 percent. Dairy products and eggs rose 20.1 percent.
Wheat Imports
The government of President Hosni Mubarak originally allocated about 10.8 billion pounds ($2 billion) to cover wheat imports this year. Now, Egypt will have to spend more than 16 billion pounds, close to 1 percent of gross domestic product, said Simon Kitchen, a senior economist at EFG-Hermes, a Cairo- based investment bank.
He said bread and fuel subsidies have kept Egypt's budget deficit above 7 percent of GDP even as the government is trying to reduce it to 3 percent by 2010.
"Inflation makes reducing subsidies hard in political terms, but more necessary in financial terms," said Kitchen. "They won't be able to reduce the fiscal deficit as quickly as they would like."
Musa Bakri and her fellow shoppers live in a dusty neighborhood nicknamed "China" because it is so crowded. They stand in line for hours to purchase subsidized bread, which costs less than 20 cents for 20 round loaves, the maximum allowable purchase at one time. "I keep coming back because bread at private stores costs two, three times as much," Musa Bakri said.
230 Million Loaves
About 85 percent of Egypt's bread -- 230 million loaves a day -- is subsidized, said Himdan Taha, undersecretary of the Ministry of Social Solidarity.
"The bread crisis was aggravated because the non-subsidized bread kept getting smaller and more expensive, so many people just joined the lines of bread, causing pressure on our system," Prime Minister Ahmed Nazif told reporters on April 3.
Even before the April 6 protests, the Egyptian workforce was demanding relief. In December, tax collectors walked out and won increases in their minimum wage from about 300 pounds a month to 1,170 pounds. Doctors in state-run hospitals are threatening to strike if the government doesn't increase their minimum wage from about 342 pounds to 980 pounds.
Though strikes by public workers are illegal in Egypt, the government met the tax collectors' demands. The doctors may not get the same treatment. On March 6, Nazif said in a radio broadcast: "Doctors in particular are prohibited from striking. Those who wish to express themselves have many alternative methods."
Unproposed
Nazif floated a proposal last fall to replace subsidies on food and fuel with welfare payments to the poor, in effect giving them checks to buy what they need at whatever price they can find. He has yet to propose the plan to the parliament.
Last month, the Egyptian government waived duties on imported rice, dairy goods, food oils, steel and cement to fight inflation, the official MENA news agency reported.
At the bakery, Musa Bakri, 45, rattled off a series of price increases she says have hit the market in just the past few months: "Meat that cost 8 pounds a kilo now cost 19 pounds. Chicken has doubled to 11 pounds a kilo."
"How about eggs?" asked a fellow shopper, Manil Ali Hassan, 35. "They're twice as much."
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Food prices to remain high: FAO
The United Nations' Food and Agriculture Organisation on Wednesday said global commodity prices were far from easing in the short term owing to tight supply-demand situation and warned of flare ups over food shortage.
"The rise in prices of food commodities all over the world, is not going to ease in the short term in view of supply-demand situation," Jacques Diouf, director general, FAO said after meeting agriculture minister Sharad Pawar.
The UN FAO director general said the world has 405 million tonnes (MT) of cereals stocks that can feed the global population for only 8-12 weeks.
"The world food situation is very serious today with food riots reported from many countries like Egypt, Cameroon, Haiti, Burkina Faso and Senegal. We fear that this may spread to other countries," he added.
Diouf noted that people in the developing countries spend 50-60 per cent of their income on food and therefore any rise in the food prices affects them.
He attributed increasing demand from the developing countries, particularly in China and India, and diversion of food grains towards production of bio-fuels for rising commodity prices across the world. However, Pawar expressed confidence that India's food situation is comfortable with sufficient stock.
"We have over half a million tons of food grain surplus than the buffer norms as on April 1 this year," Pawar said.
According to Food Corporation of India, the wheat stock as on April 1 is 5.5 MT against the buffer norm of 4 MT. Diouf informed that FAO has called an emergency meeting of head of states during June 3-5, 2008 to discuss the overall situation including impact of climate change.
The FAO Director General said the meet will also discuss whether to stop biofuel production in the developed countries which are diverting foodgrains to make ethanol.
Without naming the US, Diouf said currently 100 million tonnes of cereals are being diverted for biofuel production in one country and the quantity is estimated to increase 12-fold by 2017.
He said the world grain situation is at its lowest since 1980s. "The situation (food shortages) is due to a structural problem and a decision requires to be taken at the structural level across the world."
The rising income level of people in developing economies like China and India is an important factor in driving up the food demand. The supply of foodgrains has been affected by drought in Australia and Kazakhstan, flood in India and Bangladesh, cold temperature in China, besides climate change.
When asked for his suggestion to improve the overall situation, Diouf said it is essentially to increase food production through raising productivity level of crops, investment in rural areas and better water management.
When asked his views about GM crops to increase production, he said the member countries are divided on the issue. So far as GM issue is concerned, FAO follows the WHO and Codex standards of food products.
Les crises se multiplient, les Etats tentent de réagir 
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