Address the rice problem at its source - the speculators

Darmp Sukontasap is a senior vice president at Tesco Lotus

The main reason why we uphold this core principle is because we believe that a variety of choices should be made available to consumers. And consumers should decide for themselves what is best for them. It is also because of this thinking that our business philosophy centres around efforts to bring the best possible offers to customers at the best possible price and at the earliest possible time.

However, it seems that this principle is facing a serious challenge from an unprecedented global and national situation - sharply rising prices  of food and commodities and their scarcity.

In less than 12 months, the global benchmark prices of wheat have shot up by more than 100 per cent, soybeans are up almost 80 per cent and corn prices have soared by 40 per cent.

For the first time ever, the price of rice, which is the main staple of over half of the world's population, is going out of reach for the world's poor. The UN's Food and Agricultural Organisation recently said that at least 36 countries in the world are facing food crises.

The current global situation has even led some analysts to revisit "Malthusian economics", a theory named after a 19th century English demographer who predicted that the exponential growth of the world's population would eventually outpace mankind's ability to boost food production.

Although it is true that we are now facing an unprecedented low in global supplies of grains, resulting mainly from climatic problems in various parts of the world for the past two years, and increasing global demand for biofuel, the fact remains that we are still nowhere near Malthus's prophecy.

One thing for sure: the world is still at an early stage of reaping the benefits from genetic engineering and biotechnology in agriculture.

So what seems to be the root cause of the situation that we are in?

To say the least, there is evidence to suggest that the current shortage of food supplies in many countries, especially in food production countries such as Thailand, is to a large extent the result of economic and market manipulation rather than the underproduction of food.

Of course, the ever rising prices of oil and the resulting increases in production costs and price inflation are a big part of the equation. But it is also clear that rice production capacities in countries such as China, India, Vietnam and Thailand were steadily improving in recent months. For Thailand, in particular, it is expected that rice production this year will yield a harvest of no less than 20.5 million tonnes, almost half of which is destined for exports.

What this tells us is that there is definitely an adequate supply of rice for consumption in Thailand and that the record high prices and low availability of rice in the marketplace, including in superstores, is the work of price speculators and hoarders.

Considering that in just the first four months of the year, the global price of rice has risen from US$380 (Bt11,940) per tonne, to $760, and to the current $1,000, it is difficult for those holding stockpiles of rice not to have export ambitions.

The result is not only that fewer supplies are being erratically released into the domestic market, but also they are being done so at an increasingly higher price.

The people subjected to enduring the unnecessary hardship of rice scarcity and price inflation are consumers, especially the low-income earners who have to spend a large portion of their meagre income on food and other daily necessities.

Governments in many countries, such as China, Egypt, Indonesia and the Philippines, are taking tough measures against price speculators and food hoarders.

It is perhaps time for our government to take a page or two from them and address the problem at its source for the benefit of consumers.