Rice is the major food for many rural populations and is their food security. Rice is also a "wage" commodity for workers in the cash crop or non-agricultural sectors. These two reasons have led to various conflicting policy objectives, with policy-makers intervening to save farmers when prices drop, or to defend consumer purchasing power when there are sudden price increases.

Rice is vital for the nutrition of much of the population in Asia, as well as in Latin America and the Caribbean and in Africa; it is central to the food security of over half the world population, not to mention to the culture of many communities. Rice is therefore considered a "strategic" commodity in many countries and is, consequently, subject to a wide range of government controls and interventions.

During the 1990's, global rice production expanded at a rate of 1.8 percent per year - marginally above the population growth rate. By the end of the decade, it reached 400 million tonnes (Mt) in milled equivalent. Developing countries account for 95 percent of the total, with China and India alone responsible for over half of the world output.

During the 1990s, global trade in rice expanded on average by 7 percent a year to about 25 Mt. Despite such dynamic growth, the international rice market remains thin, accounting for only 5 to 6 percent of global output. Unlike for other bulk commodities, the international rice market is segmented into a large number of varieties and qualities, which are not easily interchangeable because of strong consumer preferences.

GECX Group trades rice on the Chicago Board of Trade (CBOT). CBOT was established in 1848 and is the world's oldest futures and options exchange. Recent trends have seen a dramatic increase in rice prices, which is down to issues such as production problems, demand increases, the increase in energy costs for producers, and even the decline in the value of the US Dollar. The US Dollar itself has contributed to about 25% of the price increases in agricultural commodities.

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