PRESS RELEASE
When Hedge Funds Embrace Rice, Can Famine Be Far Behind?
Dec. 15, 2007 (EIRNS)—As agriculture prices continue to inflate, and financial markets to implode, hedge funds and other hungry investors are eyeing previously unattractive investment opportunities, such as rice futures, with new interest, according to the Dec. 15 Wall Street Journal. Rice, like wheat and corn earlier, is soaring in price, and spiked to $13.125 this month from last year's price of just $9.87—close to a 20-year high.
Since rice is the major source of calories for much of Asia, and also parts of Africa, this pits the profit motive of rich investors directly against the food security of hundreds of millions of the world's poor.
Poor harvests, rising demand, and rising prices have led ending stocks of rice to plunge to the lowest level in 24 years. Many countries are hoarding supplies rather than exporting, and importers are finding supplies hard to find. The price of rice in Thailand, the major exporter of rice in the world, rose 20% this year. Vietnam and India have both imposed export restrictions on their rice this year.
This confluence of events has priced rice out of the reach of many food-importing countries, leading to further food insecurity. Countries relying on such agencies as the UN World Food Program (WFP) for food donations will feel the pinch as well. According to the WFP, food costs for the agency have risen by 50% in the last five years; that means less food to distribute to needy nations, which means more people are going to go hungry this year.
One reason that rice was not such an object of speculation earlier, is that little rice moves in world trade,— only about 7%. The great majority is consumed by subsistence farmers on the spot. The fact that speculation on only 7% of world rice, could drive world prices up about 30%, shows just what it is that determines the prices of gasoline, wheat, and other commodities. It is not the moron's "law of supply and demand."
