U.S., Japan working to ease shortage of food

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The United States and Japan may be near a deal to release 1.5 million tons of rice onto the world market to ease sky-high prices and avert life-threatening shortages of the world's most important food staple.

The U.S. is considering allowing Japan to release stored rice imported from the U.S. that otherwise was destined to be fed to hogs and chickens. The two countries are looking to trumpet the move as a significant remedy to the world food crisis in advance of a Group of Eight summit of world leaders being hosted by Japan in July.

"We hope to coordinate our food aid donor efforts in the coming weeks to address the urgent needs around the world," a U.S. trade official said yesterday, requesting anonymity. Nearly half the world's 6.6 billion people depend on rice for sustenance each day, and the grain has been in acute shortage all year.

Shortages and skyrocketing prices for rice have caused riots and growing hunger in nations from the Philippines to Haiti, and the crisis worsened recently with the destruction of most of Burma's rice crop by a tropical cyclone that left millions of people homeless and hungry.

"The unique conditions in the rice market this year, coupled with the growing humanitarian and political dimensions of recent food price increases in developing countries, warrants considering extraordinary measures on this occasion to calm the international rice market," the official said.

Japan needs U.S. permission to release what would be more than half its 2.4 million tons of stored rice because of World Trade Organization obligations that require it to use purchased U.S. rice imports for domestic consumption. The rice usually goes to waste and ends up being fed to farm animals.

About half of the imported rice stocks are from the United States, with the remainder primarily from Thailand and Vietnam. To sell these stocks outside its domestic market, Tokyo is required to obtain approval from the exporting countries.

Humanitarian groups have been calling on Japan to release some of its huge rice stores to alleviate the crisis. Rice prices have tripled this year to record highs that are out of reach for the world's poorest people.

"Releasing this rice to global markets would prick a speculative bubble and bring rice prices down fast, while also encouraging China and Thailand to release their surplus stocks," said Tom Slayton of the Center for Global Development.

"Failure to act would mean that high-quality U.S. rice would be fed to Japanese pigs and chickens while millions of poor people suffer from hunger and malnutrition."

Mr. Slayton said Japan should be able to cover its costs and sell the rice for about $600 a ton — half the recent export price of rice. Or it could donate the rice to the World Food Program, which has need of more than a half-million tons of rice donations.

Japan's move would be seen as a "grand gesture" that in one stroke would solve the world's rice crisis, Mr. Slayton said.

The rice crisis that emerged suddenly this year was largely due to panic and hoarding created by political and psychological conditions in Asian countries where stockpiles of the critical staple have grown thin, Mr. Slayton maintained in a paper co-authored with Stanford University professor Peter Timmer.

While rice prices had been increasing along with consumption for years, the sudden, extreme spike in prices since January was due to a chain of events that started with the imposition of rice-export restrictions by India, Thailand and Vietnam, which along with the U.S. are the top four exporters of rice worldwide.

The moves by top exporters to hoard stockpiles triggered a panic in importing countries like the Philippines to secure supplies — at any price — to ensure they had enough to eat, Mr. Slayton said.

Politics entered into it because many of the countries seeking to protect their rice supplies were facing elections in which any rice shortages would have hurt the prospects of the regime in power, he said.

"The inevitable result of such hoarding is a spiral in rice prices, the very thing that all market participants had feared," he said. "An agreement by Washington and Tokyo for Japan to release its 1.5 million tons of unwanted rice stocks is the key to piercing this bubble."

• This article is based in part on wire service reports.