Dan Walters: California growth will lead to more development conflicts

4-6-08
Sacramento Bee
Dan Walters: California growth will lead to more development conflicts
http://www.sacbee.com/111/v-print/story/840022.html
California's housing meltdown is wreaking economic and personal havoc, but it won't last forever.
The state's ever-growing population will soak up the now-vacant housing units in a year or two, and home building will resume, driven by the inexorable demand. Generally speaking, California needs about 200,000 units of new housing – single-family homes, apartments, condos or mobile homes – each year.
During the development lull, however, there's a great debate under way in a variety of venues, from the Capitol to local city councils to academic conferences, over what kind of housing it should be.
Will it be a resumption of the horizontal development that California has traditionally embraced, with new single-family subdivisions creeping outward from core cities and reached by automobile? Or will it be higher-density vertical development like that of Eastern cities (and San Francisco), served by mass transit?
The debate is not new but has gained volume because the advocates of vertical development – what Attorney General Jerry Brown describes as "elegant density" – have a new political lever in global warming.
Brown is waging a crusade for his development vision...
Brown has been suing, or threatening to sue, just about anyone who doesn't immediately adhere to his vertical vision, from the Environmental Protection Agency to local governments...
Brown is not alone in declaring war on global warming and low-density suburban sprawl. Most other Democratic politicians champion the cause, and Republican Gov. Arnold Schwarzenegger sometimes, but not always, joins them.
The conflict lies at the heart of debates over how transportation funds should be allocated, including whether California should build a high-speed "bullet train," and whether the state should develop new water supplies or rely on conservation. Simply put, should we supply more water to irrigate more suburban lawns?
The major venue for the debate, however, is a bill carried by Sen. Darrell Steinberg, D-Sacramento, the incoming Senate president pro tem. His measure, Senate Bill 375, is being backed by a coalition of environmental advocates and, in simplest terms, would strongly push local governments into adopting anti-sprawl, high-density, greenhouse gas-reducing policies. State funds, most importantly transportation funds, would be the stick to enforce the dictum.
Developers and many local governments don't like the measure, obviously. And the two sides are engaged in a battle for public opinion.
Are Californians ready to truly embrace high-density vertical development or, like Brown, do they support it in the abstract but not necessarily in person?
A burgeoning conflict in Los Angeles is, in effect, a test of the question. The city government has adopted "smart growth," another term for high-density development, and wants to implement it along Ventura Boulevard by opening it up to high-rise residential development. But local residents – and the liberal Democrats who represent them in local government such as county Supervisor Zev Yaroslavsky – are resisting because of concerns over traffic and parking.
Stockton Record
Can rice help fix the Delta?
Scientists think growing grain can reverse soil degradation...Hank Shaw
http://recordnet.com/apps/pbcs.dll/article?AID=/20080406/A_NEWS/804060320
SACRAMENTO - A fundamental problem facing the Sacramento-San Joaquin Delta is how to restore the estuary's ecosystem and relieve pressure the sloughs and rivers exert on the Delta's sunken islands while not bankrupting the farmers, many of whom have worked their plots for a century.
Rice could be the answer.
The state Department of Water Resources wants to pay for some farmers to give rice farming a go, using bond money from Proposition 84 to fund the 300-acre project. The department's hope is that rice farming will reverse the slow evaporation of the Delta's peat soils, which has caused some islands to sink more than 20 feet below sea level.
More than a century of farming has caused this massive soil loss, totaling about 2.5 billion cubic yards. That is so much dirt, it would take 125 million truckloads to level out all the islands. That's roughly the equivalent of scraping the top 2 feet of soil off all 1,399 square miles of land area in San Joaquin County.
The process is called subsidence, and it eats up to an inch of soil each year. Scientists have stopped subsidence in earlier experiments by growing native marsh tules; tules are what covered the Delta when the pioneers first arrived. As the tules die and decompose, they build up the rich peat soils that make the estuary such a fantastic farming area.
Twitchell Island is the site of the U.S. Geological Survey's tule experiment, which has lifted the soil levels about an inch per year for a decade now. And that little 15-acre patch of wetlands has become a haven for waterfowl and other wildlife.
But unless you rent it out to duck hunters, you can't make any money growing tules, and this has made farmers earning a living growing corn or asparagus reluctant to return their land to the marsh.
Rice offers a compromise. Rice also attracts waterfowl, plus it can generate cash for farmers and reduce their pumping expenses. To grow a traditional crop, Delta farmers must spend money to constantly pump their land dry; rice wants to be covered by about 5 inches of water at all times.
Scientists believe that growing rice can at the very least halt subsidence, if not reverse it. That's what the DWR proposal hopes to discover. Rice can also store carbon: Evaporating peat soils in the Delta are a significant source of greenhouse gases...
San Francisco Chronicle
Lenders retreat as housing market plummets...Sam Zuckerman
http://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2008/04/05/MNI1VS96B.DTL
As the nation's housing market swoons, lenders are tightening their grip on their money. Last month, that credit crunch reached Brent Meyers.
To all appearances, he's an unlikely victim. A well-paid chief executive of a small consulting firm, he owns a substantial investment portfolio and a million-dollar house in Moraga. He pays his bills on time and has no credit card debt. His credit score, he says, is around 800, a rating more or less in the stratosphere.
But in mid-March, Bank of America cut off his home equity credit line of a little more than $180,000, citing a decline in the value of his property...
The credit crunch made big news last month when brokerage giant Bear Stearns Cos. was forced to sell itself on the cheap after it was unable to borrow money to cover losses in its portfolio of mortgage securities. But the chill in the credit markets is not something that's hitting just big banks and securities firms.
In thousands of ways big and small, across the Bay Area and the nation, lenders are retreating after booking losses in the mortgage market. Households and businesses are suffering the consequences as money becomes tougher to get and more expensive to borrow.
That in turn spells bad news for the economy. Credit is the grease that lubricates the economic engine by giving individuals and businesses the means to spend...
Households, which gorged themselves on easy credit for most of the past decade, are bearing the brunt of lender caution. In a wide variety of consumer loan categories, particularly those backed by real estate, lenders are cutting back on loan amounts, charging higher interest and stiffening qualifications.
Take home equity loans. In the past decade, borrowing against the value of their homes became the money source of choice for homeowners who wanted large sums to pay for such items as home improvements, college tuition or luxury spending.
By 2004, Americans were taking out $180.5 billion in home equity loans, according to the Federal Reserve. Much of that cash was pumped right back into the economy, buying cars and furniture, renovated bathrooms and kitchens, airline tickets and hotel rooms.
'Unprecedented' conditions
But as home prices started to sink, homeowners had less equity to draw on. Lenders including Bank of America, Washington Mutual and Countrywide Financial cut back on home equity loans to reduce their exposure to the housing market...
Deferring expenditures
...In essence, the borrow-and-spend game that sustained American households - and boosted economic growth - reached its limit. By the fourth quarter of 2007, households devoted a record 14.2 percent of their incomes just to service debt, according to the Federal Reserve.
Watching labor costs closely...
Credit crunch leads to drop in equity lending
As home prices soared in the middle of the decade, consumers tapped the rising value of their property as a source of cash by refinancing first mortgages or taking out home equity loans. But in 2007, as home prices fell and foreclosures skyrocketed, lenders turned wary of the housing market. Home equity lending volume fell sharply in 2007, tumbling to $60.5 billion. By the last three months of the year, such lending slowed to an annual rate of $26 billion.
2003 2004 2005 2006 2007
$92.2 $180.5 $138.2 $147.5 $60.5
Note: Figures in billions
S.F. topped border counties for crime grant...Jaxon Van Derbeken...4-5-08
http://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2008/04/05/MNEV100953.DTL
San Francisco's $3.7 million federal grant to help fight border crime in 2006 was the largest awarded to any county in four states bordering Mexico, according to a federal audit that found the city was not entitled to any of the funds.
City officials have not explained why a city 500 miles from the state's southern border would have prosecuted more than 2,000 cases for the federal government that were related to drug gangs and crimes near the border in a three-year period.
The audit, which was released this week and challenged all $5.4 million that the city received from 2004 to 2006, raises questions about the basis for the city's request for funding under the Southwest Border Prosecution Initiative.
Federal officials who challenged San Francisco's grants were told that the city simply made an "estimate" of the number of cases it handled on behalf of the federal government, the audit found. In a footnote, the audit quoted city officials as saying that the grant requests were not based on "actual cases."
Federal officials also suggested in the audit that San Francisco's apparently inflated grant requests robbed other jurisdictions of money that was supposed to help them fight drugs and crime on the federal government's behalf.
In the 2006 fiscal year, smaller amounts were awarded to compensate much larger counties close to the border, including San Diego, San Bernardino and Los Angeles counties, the audit found.
The offices of San Francisco District Attorney Kamala Harris and Mayor Gavin Newsom have not responded publicly to questions raised by the federal audit, saying only that they are cooperating with the investigation by the U.S. Department of Justice.
Federal authorities have declined to release detailed findings or correspondence associated with the audit, citing the ongoing nature of the case. Federal officials say they will ask San Francisco to repay the $5.4 million the city has received as part of the program, but they have not determined how to go about it..
Inside Bay Area
State reloads on bullet train
After death watch, vital signs emerge for high-speed rail... Erik N. Nelson
http://www.insidebayarea.com/oaklandtribune/localnews/ci_8830431
A year after its already modest budget was slashed and its mortality became the butt of Sacramento jokes, California's high-speed rail enterprise appears to have re-awakened.
The threat of killing its most promising source of funding — a $10 billion bond measure on the November ballot — has dissipated with a pending State Assembly bill that will re-word the measure.
"It is accelerating the consummation of the project," beamed Quentin Kopp, chairman of the state High-Speed Rail Authority's Board of Directors, as he left a board meeting Wednesday.
Gov. Arnold Schwarzenegger, who last year brooded over the $40-billion-and-rising cost of the program, seems placated by an effort by the rail authority's effort to obtain some private financing. On March 27, the authority attracted dozens of financiers, train manufacturers, construction contractors and rail service operators exploring investment opportunities.
The authority is newly estimating that the system's first leg, from Anaheim to San Francisco, could begin moving paying passengers in 2020. That, however, still depends on November's bond measure, congressional appropriations and private partners contributing $30.6 billion...
With an agreement on the new state legislation, Assembly Bill 3034, there are signals from key figures that they'll not only abide the hefty borrowing measure, but they'll campaign for it.
To add to the bullet train's troubles, the authority spent much of last year embroiled in a dispute over which mountain pass the train would take through the Diablo Range that separates the San Joaquin Valley from the Bay Area.
All other segments of the 700-mile system had been decided. Officials representing the East Bay, San Joaquin Valley and the Sacramento area wanted the authority to pick the more northerly Altamont Pass for better access for their areas. Their counterparts in San Francisco, San Mateo and Santa Clara counties wanted the train to go through the Pacheco Pass to a stop in Gilroy, then north to San Jose and San Francisco.
The authority's board, which has only one member from the areas favoring Altamont, chose Pacheco in December, arguing it was more direct to Southern California and would require a very costly and difficult replacement of the crumbling Dumbarton railroad bridge.
One amendment being proposed for the bill rewriting the November bond measure allows some of the money to be spent improving slower-speed rail through the Altamont corridor. High-speed rail backers hope that will soothe the hard feelings of Altamont backers who warned that their constituents would sour to the ballot measure if the Pacheco Pass prevailed.
Environmental advocates, who are generally supportive of high-speed rail, are also urging that the authority use its leverage to control residential growth near stations.
One reason the Sierra Club opposed the Pacheco Pass alignment was that it would have provided quick access to large undeveloped areas of the South Bay, rather than serve already developed areas such as Livermore and Tracy near the Altamont Pass.
Some authority board members strongly urge places like Fresno and Visalia to cluster higher-density development around stations and avoid pollution-inducing sprawl in areas likely to attract high-speed commuters.
But some members dismissed those concerns, saying the time for making such deals with towns had passed since stations had been picked in outlying areas and that growth simply wasn't the authority's concern...
UC system enrollment frenzy to ease — eventually
State expecting 7 percent drop in graduating seniors by 2017...Lisa M. Krieger, MEDIANEWS STAFF
http://www.insidebayarea.com/dailyreview/localnews/ci_8830400
The fierce and frenzied competition for admission to the University of California will start to ease next year, as the number of high school graduates begins shrinking.
That news comes as little consolation to the current crop of high school seniors, the largest in state history, who are now anxiously awaiting "accept" or "reject" letters from their first-choice UC campuses.
But their younger siblings will fare better.
The number of high school graduates will drop nearly 7 percent over the next nine years. And the continued expansion of UC campuses means that there will be even more slots for applicants.
The best news is for the parents of today's third-graders, who will face the least competition for UC slots when their children graduate in 2017. After that, student numbers start climbing again...
Only 8.3 percent of last year's eligible high school graduates enrolled at UC. The university wants to increase that number to 9.2 percent, an all-time high.
UC also seeks to boost the number of graduate school slots, strengthening its mission as a research institution. In the coming decade, it plans to enroll almost 50 percent more grad students — especially in the sciences, engineering, math and health fields, which are deemed most essential to California's future economy.
Although campuses in Berkeley, Los Angeles and Santa Barbara will expand only minimally, others — such as Santa Cruz, San Diego and Irvine — will continue to grow. The largest growth projects will be at Davis, Merced and Riverside...
The university provides updated growth projections every five to 10 years. Its latest data — based on a declining birth rate in the 1990s — was presented in March to the state Legislature, which decides how much to fund UC.
Contra Costa Times
Aging canals teeming with trouble
Nevada disaster serves as wake-up call to water engineers around West...Scott Sonner, ASSOCIATED PRESS
http://www.contracostatimes.com/environment/ci_8830566
FERNLEY, Nev. -- The failure of an earthen embankment on a century-old irrigation canal that flooded this growing town has federal water managers concerned about the safety of nearly 8,000 miles of similar aging canals across the West.
The January breach of the Truckee Canal flooded nearly 600 homes, making Fernley a state and federal disaster area.
"As a result of this, we are taking a look at our canals with a little more scrutiny," said Jeffrey McCracken, regional spokesman for the Bureau of Reclamation in Sacramento.
The review is no small task. The bureau owns 7,911 miles of canals in 17 Western states, the vast majority of them managed and operated by local irrigation and water districts.
And the review is made more urgent by the change in demographics across much of the West from rural to urban. Hundreds of Fernley homes sit along the Truckee Canal, which just a decade ago ran primarily through farm fields.
"Fernley is the perfect example. The canal has been here 100 years and, all of the sudden, 500 homes get constructed next to it," McCracken said...
Crews started digging the Truckee Canal in 1903 with mules and steam shovels. In 1960, Fernley's population stood at 654; today, the town serves as a bedroom community of Reno, 30 miles to the west, and the population is about 20,000.
That change will control the priority of canal surveys.
"We will focus initially on canals in those urbanized areas. There's a lot in the Phoenix area,"
McCracken said. "The other real old one out West is up in the Klamath Basin" in northern California and southern Oregon.
"The tragic situation that occurred on the Fernley canal is an impetus for these other irrigation districts and water districts to get on top of everything they can. And I'm not implying they are not, but let's go look."
Santa Cruz Sentinel
Dan Haifley, Our Ocean Backyard: The Collapse of Salmon: Can they return?
http://www.santacruzsentinel.com/ci_8829516
The announcement on the California Fish and Game Web site gets to the point: "...emergency action was taken to close the April 5 sport fishing openers in San Francisco and Monterey port areas [south of Point Arena to the U.S.-Mexico Border]. These actions are being taken to protect Sacramento River fall chinook salmon which returned to the Central Valley in 2007 at record low numbers."
This impacts more than dinner; it hurts fishermen and businesses that serve them. Barbara Karleen, who fishes locally, says the most money is generated from salmon: "Not counting fuel, you can fish for rock cod for under $20; salmon can cost $100 or more."
It is also an indicator of ocean conditions. According to the Pacific Fishery Management Council's Salmon Technical Team: "In 2007 the adult spawning escapement for Sacramento River fall chinook salmon failed to meet its goal for the first time in 15 years. The escapement goal is the optimal number of adult fish returning to spawn to maximize the production of the stock. Also, the count of 'jacks' in the Central Valley fall chinook return this past fall was a record low. Only 2,000 returned, compared to an average of about 40,000 and the previous record low of 10,000. Jacks are immature fish that return to the rivers at age 2 -- unlike adult fish, which return at age 3 or 4. Their numbers forecast future returns."
"Chief culprits are conditions in the Sacramento and San Joaquin River Delta." says Santa Cruz Port Director Brian Foss. "The delta is the primary source of salmon up through southern Oregon, that's the fishery most in decline. The second reason is the state of the ocean. There has not been the nutrient rich upwelling of cold water. This may be from climate change."
Karleen believes that one factor could be the cyclical warming of Monterey Bay.
"The salmon have not been coming in," Karleen said. "There are reports of Sacramento salmon off Alaska."
Kaitilin Gaffney is the Ocean Conservancy's local director.
"Agriculture, logging and development have resulted in destruction of spawning habitat." she says. "Dams prevent salmon from accessing spawning grounds, water diversions suck rivers dry. Overfishing has also reduced salmon populations. Salmon require both healthy freshwater habitat and good ocean conditions, so this indicates that California's rivers and ocean are in trouble. We need ecosystem-based management that addresses impacts both from the land and the sea to protect not only salmon but other wildlife as well. The salmon collapse should be a wake-up call for measures that look at the entire ecosystem and ensure sustainability."
Foss is optimistic: "Salmon are designed for multiyear disasters and can survive. When Mount Saint Helens erupted, it blocked natural spawning streams. There was a theory that the salmon were genetically programmed to return to their exact roots, that they would die trying rather than seek other streams, but they went to new areas to repopulate. There's hope."
Like other species, salmon are dependent upon ocean health, and that's up to us.
Coyotes a wily wild neighbor...Vikki Simons-Krupp
http://www.santacruzsentinel.com/ci_8829514
The coyote is a member of the dog family and is native to California. They are one of the three different types of wild dogs found in North America. The coyote resembles a small German shepherd with the exception of the long snout and bushy, black-tipped tail. It's high pitched yodel-like yapping can frequently be heard at night and the sound can travel three miles or more.
Their name comes from the Aztec word for species, coyotl. The coyote was called "song dog" by American Indians and the scientific name canis latrans means "barking dog."
The males are typically heavier than females. Females bear an average of five to 10 pups annually. They mate in February and pups are usually born in April or May. At 10 weeks of age, the pups are old enough to join in on hunts. At about 7 to 8 months of age, the pups are then ready to leave their parents...
Observing coyotes and other wildlife is one of the many benefits of living near their habitat. However, when well-meaning people feed coyotes they can become unnaturally bold. Due to the rapid loss of their habitat by development, many coyotes have been forced to cohabit with humans. We need to learn to coexist with this native species.
Humans are the coyote's chief enemy...
Coyotes help to keep the balance of nature in order. Education is the solution to our coexistence.
Coyotes contribute many beneficial aspects to our ecosystem as they are helpful to farmers, ranchers, gardeners and homeowners. Coyotes kill destructive, vegetation-eating rodents, which are 80 percent of a coyote's diet. Natural rodent control is always preferable to man-made poisons and inhumane traps. Coyotes also eat insects and have saved many farms from insect invasions.
Coyotes almost certainly do humans more good than harm, however, they are opportunistic feeders. They will eat whatever is most readily available. Their primary foods are fruits, berries, rodents and insects. They will scavenge on animal remains as well as garbage and pet foods left outdoors. In suburban areas, they have been known to prey on unprotected pets. Everything a coyote does is related to a potential meal. Here are a few suggestions to make your property less attractive to coyotes: ...
Chuck Molnar, Senior Corner: Seniors can opt out of many property taxes
http://www.santacruzsentinel.com/ci_8831449
In response to a request from a reader of this column, here is some information regarding school parcel taxes and parcel tax exemptions for seniors.
Currently there are three parcel taxes in effect in support of Santa Cruz area schools...
Seniors, 65 and over, who own property within the above mentioned areas and reside in that property as their principal residence may apply to the Santa Cruz City Schools district for an exemption from any or all of these parcel taxes. Once applied for and granted, the exemptions remain in effect for the life of the measure, so long as the senior remains the legal owner and resides on that property...
Washington Post
Housing Crisis Hits Its Own
Mortgage Bankers Group Faced With Tougher Terms...Jeffrey H. Birnbaum
http://www.washingtonpost.com/wp-dyn/content/article/2008/04/05/AR2008040502632_pf.html
A year ago, the Mortgage Bankers Association was thrilled to sign a contract to buy a fancy new headquarters building in downtown Washington. Interest rates were low, the group's revenues were steady and the prospects for quickly renting out part of the structure were strong.
But since then, the association has fallen on tough times as many of the subprime mortgages dispensed by some of its members proved dicey. Borrowers discovered the loans were more costly than they had anticipated. Foreclosures soared, and cheap, inexpensive credit dried up, slowing the economy.
The result: The trade group is about to find it harder than it imagined to pay its own mortgage.
Scheduled to close on the building in the coming weeks, the association will have to pay millions of dollars more than it would have a year ago when it contracted to buy the 160,000-square-foot structure -- millions of dollars it is now less able to afford.
The group's leaders defend the transaction as prudent and, in the long run, wise. "Anytime is the best time to buy," said Kieran P. Quinn, chairman of the association. "Over a 10-year horizon, [the purchase] looks great."
But the short run looks a little bumpy. "The association's timing is not good, to say the least," said John E. "Chip" Akridge, a local developer. "I'm sure a year ago they would have rethought their decision if they knew what was going to happen."
Critics also see irony -- and some justice -- in this predicament. "They are certainly getting what they deserve," said Dean Baker, co-director of the Center for Economic and Policy Research, a liberal research group. "Mortgage bankers encouraged people to take out mortgages that were very risky, and the result of that was a large number of the mortgages went bad and caused mortgage interest rates to soar. Now they are the victims of high mortgage rates and chaos in the market more generally."
The lobbying group is about to sign the final papers to buy the 12-story building on L Street NW for about $100 million. Like many of the companies it represents, the organization is facing a triple whammy of woes: Its financing costs are up, its income is down, and the leasing market is slow, leaving it, so far, without a single tenant.
In recent months, the money available for mortgage lending has dried up dramatically. In 2003, $3.9 trillion was loaned to help finance single-family homes. This year, the industry estimates that home mortgage lending will reach barely half that amount.
The pullback has played havoc with the association's membership and budget. A year ago, it had more than 3,000 member companies. Now, it has about 2,500, a 17 percent decline, Quinn said...
The Observer
Food riots fear after rice price hits a high
Shortages of the staple crop of half the world's people could bring unrest across Asia and Africa...Peter Beaumont
http://www.guardian.co.uk/environment/2008/apr/06/food.foodanddrink
A global rice shortage that has seen prices of one of the world's most important staple foods increase by 50 per cent in the past two weeks alone is triggering an international crisis, with countries banning export and threatening serious punishment for hoarders.
With rice stocks at their lowest for 30 years, prices of the grain rose more than 10 per cent on Friday to record highs and are expected to soar further in the coming months. Already China, India, Egypt, Vietnam and Cambodia have imposed tariffs or export bans, as it has become clear that world production of rice this year will decline in real terms by 3.5 per cent. The impact will be felt most keenly by the world's poorest populations, who have become increasingly dependent on the crop as the prices of other grains have become too costly.
Rice is the staple food for more than half the world's population. This is the second year running in which production - which increased in real terms last year - has failed to keep pace with population growth. The harvest has also been hit by drought, particularly in China and Australia, forcing producers to hoard their crops to satisfy local markets.
The increase in rice prices - which some believe could increase by a further 40 per cent in coming months - has matched sharp inflation in other key food products. But with rice relied on by some eight billion people, the impact of a prolonged rice crisis for the world's poor - a large part of whose available income is spent on food - threatens to be devastating.
The consequences are visible across the globe. In Bangladesh, government-run outlets that sell subsidised rice have been besieged by queues comprised largely of the country's middle classes, who will queue for hours to purchase five kilograms of rice sold at 30 per cent cheaper than on the open market...
Bloomberg.com
Rice Jumps to Record on Speculation Demand Will Outpace Supply...Glenys Sim...4-3-08
http://www.bloomberg.com/apps/news?pid=20601087&sid=acnqou1542Qs&refer=home
Rice climbed to a record on speculation the 3 percent annual increase in global demand for cereals will outstrip supply as governments curb exports to prevent shortages.
Rice, the staple food for about 3 billion people, rose as much as 2.8 percent in Chicago and has nearly doubled in the past year. Consumption has increased on rising imports by the Philippines, the biggest buyer, and as global food supplies lag behind demand growth fueled by China and India... Rough rice for May delivery rose 41 cents, or 2.1 percent, to $20.20 per 100 pounds on the Chicago Board of Trade, after earlier reaching a record $20.35. The United Nations' Food and Agriculture Organization said global exports will drop 3.5 percent this year as nations curb sales.
China, India and Vietnam have cut rice exports, and Indonesia has reduced import tariffs to protect food supplies and cool inflation. Rice in Chicago climbed 42 percent in the first quarter, more than all of last year's 33 percent gain. Record grain prices contributed to strikes in Argentina, riots in Ivory Coast and a crackdown on illicit exports in Pakistan. The World Bank estimates 33 countries face potential social unrest because of increasing food and energy prices, Robert Zoellick, the bank's president, said on the organization's Web site...
Commodity prices are posting their seventh year of gains. The UBS Bloomberg Constant Maturity Commodity Index of 26 raw materials more than tripled in the past six years as global demand led by China outpaced supplies of metals and crops. The Standard & Poor's 500 Index of U.S. equities gained 22 percent over the same period...
``The international rice market is currently facing a particularly difficult situation with demand outstripping supply and substantial price increases,'' said Concepcion Calpe, a senior economist at the Rome-based FAO, an agency that seeks to achieve global-food security... Global production will rise to a record 422.9 million metric tons this year, the U.S. Department of Agriculture said on March 11. Consumption may increase to 422.5 million tons, also the most-ever, leaving 75.2 million tons stored globally at the end of the year, the USDA said. Corn has gained 73 percent in the past year, touching a record $6.0275 a bushel today in Chicago. Soybeans are up 65 percent in the past 12 months, reaching $15.8625 on March 3, the highest ever. Wheat rose to a record $13.495 a bushel on Feb. 27 and has more than doubled in the past year... The UN warned in February that 36 countries, including China, face food emergencies this year, as stockpiles of grains such as rice drop to a 26-year low.
The Vietnam Food Association has asked its members to stop signing new rice-export contracts between April and June, following Prime Minister Nguyen Tan Dung's directive to cut deliveries of the grain overseas. Vietnam, one of the world's three biggest rice exporters, will reduce shipments this year to 4 million tons to ensure supplies domestically and curb inflation that's at its highest in more than a decade. The government also said it's considering a tax on rice exports.
Malaysia plans to step up efforts to import rice from other Southeast Asian nations to build reserves. The Philippines is buying the grain from an emergency regional stockpile and taking additional supplies from the U.S.
The Financial Express (India)
Ban on futures trading may widen...Sandip Das, Bipin Chandran...4-3-08
http://www.financialexpress.com/news/Ban-on-futures-trading-may-widen/292291/
New Delhi, Apr 3 The government may ban futures trading in more food items like edible oil and potato to cool inflation that touched a 13-month high.
This is the third instance of the government banning futures trading in commodities. To rein in prices of urad and tur, the government had banned futures trading in pulses on January 23, 2007, which was extended to rice and wheat on February 28, 2007.
The left parties, key supporter of the United Progressive Alliance government, had been demanding a ban on futures trading to curb speculation in the market. However, traders and commodity exchange officials feel such bans will not impact prices much.
Leading commodity exchanges like Multi Commodity Exchange of India (MCX) & National Commodity & Derivatives Exchange (NCDEX) hold futures trading as an efficient instrument of price discovery for farmers. “The prices of commodities depend upon fundamentals such as demand and supply; exchanges do not have any role in rising prices,” a MCX official told FE. Traders in commodities like edible oil and other food items say that besides the demand and supply mismatches, the government has failed to curb the hoarding of essential commodities.
“The futures trading ban may not have any impact on edible oil prices, as international prices and imports duties determine the prices,” a trader said...