Rice importers in the United Arab Emirates are demanding at least a 25 percent subsidy for rice as international prices continue to rise and stocks come under pressure.

The Ministry of Economy of the second-largest Arab economy has been trying to curb inflation, partly by signing agreements with supermarket chains to fix food prices at 2007 levels.

'Our margins are so squeezed now, and some of us are making losses...I think asking for only 25 percent rice subsidy is a fair and modest demand,' an Abu-Dhabi rice importer said.

'International rice prices are going through the roof, so by fixing prices at 2007 levels without subsidies, the government is not taking into consideration what importers will have to face and giving room for a black market.'    

India, the world's second-biggest rice exporter in 2007, banned all non-basmati rice shipments in March, one of a series of protectionist measures worldwide that triggered a wave of panic buying, causing benchmark Thai prices to nearly treble.

Vietnam, China and Egypt have also curbed exports.

Last year, the UAE imported about 750,000 tonnes of rice mainly from India, Pakistan, Thailand and Egypt, traders said.

The Emirates Society for Consumer Protection has urged the government to subsidise basic food items as part of measures to curb food price rises, which it expects to reach 40 percent this year,its executive manager Jamal al-Saeedi said on Wednesday.

Food price inflation in the UAE is partly driven by the dirham's link to the dollar, which hit record lows against the euro and a basket of major currencies last week, experts and traders said.

'The loss figures of rice importers mentioned in the proposals by the consumer protection officials are very alarming,' another rice importer said.

'A number of companies have already stopped importing till the government offers some sort of support and I will do the same soon if this situation continues,' he told Reuters.

The rising price of staples such as rice -- called a 'silent tsunami' by the World Food Programme -- has sparked violent protests from Haiti to Somalia, and heightened fears that the world's poor may soon struggle to feed themselves.

Many countries have responded to high prices by imposing taxes and other restrictions on exports -- allowed under World Trade Organisation rules -- to try to ensure adequate domestic supplies.

The Gulf Arab countries rely heavily on food imports, leaving them vulnerable to price changes on the international markets.

In Oman, the government said last week it was buying 200,000 tonnes of rice for its strategic food reserves, enough to feed the population for two years, while Saudi Arabia plans to create facilities to stockpile basic staples and said it would increase global investments to ensure its long-term food security.

'Some of the Gulf countries, including the UAE, are looking for opportunities to invest in agricultural lands outside their territories, but these things don't happen overnight,' a government source said.

'The government is also looking into other alternative solutions like building up strategic food reserves...this will make people less anxious and importers less exposed to international prices.'  -Reuters