Rice market in turmoil as India curtails exports
Rice prices have soared to the highest in a decade as India limits exports and erratic weather wreaks havoc on Asian rice fields. This is likely to worsen food insecurity in many countries that rely on rice as a staple.
Rice prices have seen a sharp surge in recent months as major producers curtail their trade and supplies. This could impact millions of consumers around the world, with Asian and African countries expected to bear the brunt.
Thailand, the world's second-largest rice exporter, is urging its farmers to reduce rice cultivation as part of an effort to conserve water.
"The cumulative rainfall is approximately 40% below normal levels, posing a high risk of water shortage," said Surasri Kidtimonton, secretary-general of the ONWR, in a statement released by Thailand's National Water Administration on July 31. Kidtimonton encouraged farmers to consider planting crops that require less water and have faster harvesting cycles.
The world's top exporter of rice, India, imposed an export ban on non-Basmati white rice last month, with the government saying its aim was to help lower rice prices at home and secure domestic availability.
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The United Arab Emirates, a major importer and re-exporter of Indian rice, followed suit, restricting sales of its rice supplies to other countries.
Thai and Vietnamese exporters reacted by pushing to renegotiate the prices on sales contracts for around half a million tons for August shipments, Reuters news agency reported on August 1.
The recent developments come as the global food markets are grappling with the repercussions of Russia's withdrawal from the Black Sea grain deal, which terminated an agreement allowing safe export of Ukrainian grain via the Black Sea amid Moscow's invasion of its neighbor. Russia has also ramped up its military attacks on Ukraine's port and grain facilities.
This has fueled concerns that disruptions in the global rice trade could worsen the already endangered food security situation in many countries.
Why are rice prices increasing?
Rice prices have surged to their highest levels in a decade, marking a 14% increase since last June. The situation is primarily caused by warmer, drier weather and erratic rainfall damaging rice production throughout Asia. In the past months, torrential rains and floods in northern India, for example, have damaged many rice fields.
Additionally,rising fertilizer and fuel prices have contributed to increased production costs.
The ongoing war in Ukraine and the termination of the grain deal have also constrained the global supply of wheat and corn, raising the demand for rice as an alternative staple.
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