Rice.

Rice production in the Asia Pacific Region is likely to satisfy demand, but prices will continue to rise. According to the United Nation's Food and Agriculture Organization (FAO) 2006 production declined, but a recovery is expected in 2007. This information appeared in the FAO's Rice Market Monitor for March 2007.

Rice production in 2006 was hurt "by an irregular pattern of the monsoons and insect attacks," said the FAO.

Almost all Asian countries are expected to produce more rice in 2007, leading world supply. "The 2007 expected production gains are expected to originate in Asia, where all the major producing countries are foreseen to grow more rice this season, with a few exceptions." The exceptions are declining 2007 production in Japan and Sri Lanka.

Also, the Republic of Korea's production will decline because its agricultural sector is undergoing change. Indonesian production will be down due to the late arrival of rain as planting got underway.

The FAO's overall Rice Price Index stood at 120 in March 2007, a record for prices recorded since 2002.

An official of Thailand's Rice Exporter's Association told Dow Jones Newires on May 11, 2007 that, "Rising consumption is likely to push global rice demand higher in 2007 to 418 million tons versus 414 million tons last year."

Along with rising prices, rice inventories have been falling. An analysis of the Asian rice market published by the China Economic Review in April 2007 said, "Despite its importance, rice may be at the heart of a growing food crisis-prices have risen to a 10-year high while stocks have plummeted to a 30-year low."

Because of low yields in Chinese rice production, and concomitant price increases, consumer prices overall increased 2.7 percent in February 2007 (year-on-year) and 2.2 percent in January 2007.

A spokesperson for the United Nations Development Program (UNDP) told the China Economic Review that rising prices create a dilemma for China's agricultural sector.

Even higher prices for rice do not match what a farmer can earn for growing vegetables or flowers. China's government relies on price controls and subsidies to ensure affordable rice. But one critic quoted in the Reveiw said, "that the price controls placed on rice to keep it within the budgets of the masses are turning it into a dead-end crop-farmers simply aren't willing to grow something where the profit margins are artificially low."

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