Global rice price surge

The global rice market is heating up as prices of this essential food item reach their highest level in 12 years. The rice price surge is not expected to subside anytime soon, due to the El Niño phenomenon affecting crops in major food-producing regions, while stockpiling is increasing amid hyperinflation and security instability in many countries.

In its recently released report, the United Nations Food and Agriculture Organization (FAO) stated that the rice price index in July increased by 2.8%, reaching 129.7 points, the highest level since September 2011. Worryingly, rice prices are projected to continue rising. According to the Thai Rice Exporters Association, market instability could persist until the end of 2023.

Peter Timmer, Professor Emeritus at Harvard University (USA), believes that rice prices will continue to rise over the next 6 to 12 months. However, whether the increase will be slow, allowing consumers time to adapt, or a sudden surge remains an open question.

Thai rice exports.

Analysts believe that one of the main reasons for the recent surge in rice prices is India's announcement in late July that it would ban the export of all white rice varieties other than basmati. New Delhi claims the ban aims to stabilize prices and prevent food shortages domestically due to extreme weather conditions.

According to experts, India's latest ban is similar to the restrictions it imposed in 2007-2008, but the impact on global supply and prices could be more far-reaching. Compared to 22% 15 years ago, India now accounts for more than 40% of the global rice trade.

According to statistics, India exported 22 million tons of rice to 140 countries last year. Therefore, the latest move by the world's largest rice exporter immediately shook the global market, pushing rice prices up by about 20% compared to levels before India's ban.

In addition, extreme weather has severely impacted production in the world's leading rice-producing regions. This year, India's monsoon season started late with unusually heavy and uneven rainfall, hindering farmers' cultivation. It is estimated that the area of rice fields currently under cultivation in India is 6% lower than the same period in 2022. In Indonesia, farmers in top rice-producing regions are switching to growing corn and cabbage to prepare for drought.

Thailand, the world's second-largest rice exporter, is experiencing low rainfall this year while preparing for a potential drought in 2024 due to the El Niño phenomenon. The Royal Thai Irrigation Department reports that this year's rainfall will be below the 30-year average. Water levels in major dams have dropped by approximately 50% compared to 2022. In this context, the Thai government is encouraging farmers to reduce rice cultivation and switch to other crops to adapt to the reduced rainfall conditions.

Many experts believe that the soaring price of rice will have unpredictable consequences. Affirming that the poor are the most vulnerable to food price shocks, Joseph Glauber, a senior fellow at the International Food Policy Research Institute, noted that high rice prices affect the diets of billions of people in Asia and Africa, who consider rice a staple food.

High prices coupled with dwindling supply increase the risk of a new wave of trade protectionism, as governments tighten export controls to secure food reserves. In fact, shortly after India imposed its ban, the United Arab Emirates (UAE) also imposed a four-month ban on rice exports and re-exports, while Russia announced a temporary suspension of raw and processed rice exports until the end of the year to support its domestic market.

The continuous record-breaking price of rice is putting immense pressure on the already severely unbalanced global food system. According to the United Nations, more than 780 million people worldwide are facing food insecurity. This number could rise even higher as a result of supply disruptions and the soaring price of rice.

According to Nhan Dan Newspaper

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