Rice prices rising despite record world crop

By Svetlana Kovalyova

MILAN (Reuters) - World rice production will hit a record high this year but increasing demand and restrictions on exports will keep prices high, the United Nations Food and Agriculture Organisation said on Monday.

Global prices of staple foods have risen more than 40 percent in the last year causing shortages, hoarding and riots in some developing countries.

Rice prices have soared this year, and with world stocks at their lowest since the early 1980s governments and importers have scrambled to stock up amid fears of shortages.

"World paddy production in 2008 could grow by about 2.3 percent, reaching a new record level of 666 million tonnes, according to our preliminary forecasts," FAO rice expert Concepcion Calpe said in a statement.

"For the first time, paddy production in Asia may surpass the 600 million tonne benchmark this year, amounting to 605 million tonnes," Calpe said.

In Africa, rice output is forecast to grow 3.6 percent to 23.2 million tonnes in 2008, while output in Latin America and the Caribbean is seen rising 7.4 percent to 26.2 million tonnes, the FAO said.

The current forecast may worsen due to the cyclone which hit Myanmar when rice farmers were harvesting their dry season crop accounting for 20 percent of annual production, Calpe said.

Rice prices have risen by 76 percent between December 2007 and April 2008, according to the FAO, and they were expected to remain relatively high because stocks held by exporters were expected to be reduced.