Pitifully low food stocks, dark warnings of severe penalties for hoarders, export bans and even the spectre of riots.
It sounds like a dystopian nightmare. But it is happening today. The price of rice – the staple foodstuff for more than 8 billion people around the world – has shot up by more than a half in just two weeks. What is more, analysts are predicting worse to come.
Traders have warned that popular Thai white rice could reach and surpass $1,000 a tonne in the next three months. It hit an all-time record of $850 a tonne on Friday from $760 the previous week.
The spike in the price of rice has been matched by similar rises in other globally important foodstuffs such as maize, soya, wheat, and corn. And if the experts are to be believed, the rises will be sustained. Higher food prices are going to be with us for some time to come.
Richard Feltes, senior vice president and director of commodities research at MF Global in Chicago, says: "We are in a strong bull market and there is no sign in the short term of this turning down. The most ominous thing is that a lot of the African countries thought there would be a downturn when prices first started trending higher. They sat back and let stocks dwindle and they now find themselves with record prices and much less than they usually have in reserves."
The consequences of their inaction could yet spiral into crisis, with countries such as India, Vietnam, China and Cambodia all imposing tariffs of full-scale export bans with the aim of preserving their stocks. When they start to enter the market in search of desperately needed supplies, the price can only rise.
So what has caused the current runaway growth?
In addition to a run of poor harvests, Mr Feltes identifies the dramatic increase in demand for bio-fuels, sparked by a combination of high oil prices and rising environmental awareness, as a major reason, as well as a general plundering of reserves around the globe and a sharp rise in incomes in parts of the developing world.
Not only are consumers in India and China eating more meals, their diets have changed with an increasing demand for meat. Arable land diverted to producing feed for animals (or fuel) reduces arable land available for use to feed humans. Producing a kilo of meat takes many times the number of acres required to produce a kilo of rice.
Mr Feltes also says the weakness of the dollar has a major impact, with even long-term investors starting to enter the agricultural markets alongside the usual band of speculators. That further drives pricing pressure.
Amy Reynolds, an economist with the London-based International Grain Council, which advises policymakers, also believes prices of foodstuffs will remain stubbornly high, although wheat has eased in recent months.
"Supplies of wheat will be better for the 2008 to 2009 year but we would expect prices to stay quite strong. It is about supply and demand but while farmers are responding, when you have the wheat area expanding, for example, the maize area falls. The demand for bio fuels is certainly going up, particularly in the US."
Sudakshina Unnikrishnan, a commodities analyst with Barclays Capital, says: "There are a lot of factors coming together to drive the prices of foodstuffs together. Absolute demand remains robust and the second biggest driver, demand for feed, is also strong. In countries such as China you have rising disposable income which drives demand for protein and meat."
She identifies some worrying trends in, for example, corn where China, a net exporter, is due to become a net importer in the next few years, while the US is scaling back exports as demand for biofuels increases.
Inevitably, of course, price rises will have the most painful effects in the developing world, where disposable incomes are lower. Recent economic gains could be reversed in some countries because people will have no choice but to divert newly found disposable income back to food.
The pain we will feel in the West can hardly be compared to what is being suffered by those for whom rice is the only available food.
But the current agricultural price boom will nonetheless make life extraordinarily difficult for the Bank of England's Monetary Policy Committee, which meets on Thursday with demands for steep cuts in interest rates ringing in its members' ears.
Philip Shaw, an economist with Investec, says: "When you look at countries with low wage growth, and I would class Britain as one of them, what food inflation does is leave less money for discretionary purchases." That is not good news for an economy which has been heavily reliant on a sustained consumer boom.
The MPC knows that its decisions will have little impact on the prices of either fuel or global food commodities.
But Mr Shaw says: "Rises in fuel and food prices put the Bank's inflation target in danger. The Bank can't do much about global pressures, so it will have to act on domestic inflation pressures. It will want to make sure that there is a limiting factor on companies domestically seeking to put up their prices to deal with rising global costs. The MPC's ability to manoeuvre has been constrained."
This is something the MPC and other central banks are just going to have to live with.
How Asian governments are tackling rising prices and limited supplies
By Andrew Buncombe
Across Asia, governments are desperately wondering how to deal with rising prices and limited supplies of the region's main staple.
Last week, Philippine President Gloria Macapagal-Arroyo convened a food summit with her senior officials and farm experts. The country is the world's single largest importer of rice, and her government rapidly needs to find ways of secure adequate supplies as several exporters hoard stocks in order to ensure they can feed their own populations.
India, meanwhile, has banned the export of all non-basmati rice to try to ease pressure on prices which are at a 14-month high. Experts at the UN Food and Agriculture Organisation said recently that international rice prices had increased by about 20 percent in the past three months and had at least doubled since 2004.
In the Philippines, the government was forced to do a deal with Vietnam to buy 1.5 million tonnes of rice at a price of $708 a tonne, almost 50 per cent more than it paid in January. Traders in Vietnam are having to negotiate a block on exports, similar to India, that the government imposed for March and April.
Cambodia, where food prices have jumped by around 40 per cent in the past year, has also imposed a ban on rice exports. Several hundred people protested outside the Cambodian parliament, demanding the government take action.
Sri Lanka, where rice production does not meet domestic demands, is likely to turn to Burma to try to meet its shortfall. The Sri Lankan trade minister is said to be seeking a deal to ensure 100,000 tonnes of rice from Burma's military government. In Bangladesh, a paramilitary group has been given oversight of the rice markets to prevent price gouging. The Thai prime minister, Samak Sundaravej, has urged people not to panic-buy, saying production is normal. "People are now buying more rice than they normally would," he said in a televised address.
Jose Daboub, a World Bank official told the 10-nation Association of Southeast Asian Nations, meeting last week: "Governments need to take short-term steps to protect the poor, but also to ensure that long-term solutions [were] found to relieve shortages."Reuse content