Rhys Blakely, Bombay, and Leo Lewis, Asian Business Correspondent
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The cyclone that has devastated Burma is not only set to push world rice prices higher but may have jeopardised the country’s long-term ability to feed its own population, Asian food experts say.
As well as unleashing a catastrophic loss of life, Cyclone Nargis appears to have been fiercest in Burma’s main rice-growing region, the Irrawaddy delta.
Full details of the damage are not yet clear, say World Food Programme officials, but the growing fear is that millions of tons of salt water have flooded onto the precious rice paddies, making them unfit for planting for some time.
The UN agency said that it was not yet known whether Burma, a key rice exporter, would be able to meet commitments to supply the staple to Sri Lanka and Bangladesh and has warned of "potentially serious effects".
The price of rice has trebled across Asia this year, hitting a record $25.07 per 100 pounds on April 24. Some local market prices have risen tenfold in the past year and several governments have responded by imposing export bans. Rice is currently trading around $20.96 per 100 pounds.
The price rise has put a severe strain on poor families which spend most of their incomes on food and countries such as Bangladesh have already been forced to plead with neighbouring states, including India, to guarantee supplies.
Officials in Burma say that it is still too early to know the full impact of the storm on rice supplies but it is thought likely shipments out of the country will be delayed. "We are still carrying out a damage survey of our rice stocks and will make an appropriate decision after that," an official from the national Federation of Commerce and Industry told Reuters.
If several harvests are missed as a result of the calamity, Burma’s rickety food economy and impoverished population may take the blow the country can least afford and become a net importer of rice. Given Burma’s uncomfortable relationship with many suppliers in the region China, which remains close to the military regime, would probably step in as the main exporter.
Becoming an importer is not a position anyone would wish for under current market conditions: yesterday the Philippines was forced to cancel a huge tender for rice imports because only one bidder emerged with an impossible price for the goods.
The International Rice Research Institute warned that, with the year’s second harvest imminent, weather patterns in Asia would come under unprecedented scrutiny: the freak damage caused by the cyclone will now exacerbate that.
The WFP yesterday raised the prospect for "long-term food insecurity" in Burma, and the president of the powerful Thai Rice Exporters Association acknowledged that it may soon have to export rice to a country that used to produce enough to meet its own needs.
The region is likely to suffer too. Burma was preparing to export 400,000 tons of rice over the course of this year and had been hoping to profit from record price levels.
Commodity traders in Hong Kong told The Times that with rice and other international grain markets now on a "hair-trigger" for bad news, emerging details of the cyclone could cause cause further panic among Asian governments still struggling to devise the right policy response to soaring food inflation.
Burma is one of the countries that Samak Sundaravej, Thailand's Prime Minister, recently proposed to draw together in a cartel of South-East Asian rice exporters. The plan to create a body that would seek to wield a greater influence over rice prices has drawn heavy criticism from importers.
In the wake of mounting concerns over rice supplies, Mr Samak said that he would seek to bring together Thailand, Vietnam, Burma, Laos and Cambodia in a price-setting organisation.
At least 15,000 people have been killed and up to 30,000 are missing after the catastrophic cyclone struck Burma at the weekend, with officials warning that the toll was likely to rise.
Nyan Win, the Burmese Foreign Minister, said on state television that 10,000 people had died in just one town, Bogalay, as he gave the first detailed account of the worst cyclone to hit Asia since 1991, when 143,000 people died in Bangladesh.
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