In a recently released report, the Food and Agriculture Organization of the United Nations (FAO) said that the rice price index rose 2.8% to 129.7 points in July, reaching its highest level since September 2011. Worryingly, rice prices are forecast to continue to climb. According to the Thai Rice Exporters Association, the market instability could last until the end of 2023.
Peter Timmer, professor emeritus at Harvard University (USA), believes that rice prices will continue to rise in the next 6 to 12 months. However, whether the rate of increase will be slow so that consumers have time to adapt or will increase suddenly is still an open question.
Thai rice exports.
Analysts say one of the main reasons for the recent surge in rice prices is that India announced a ban on the export of non-basmati white rice in late July. New Delhi said the ban was aimed at stabilizing prices and preventing food shortages in the country due to harsh weather conditions.
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 profound, experts say. Compared to 22% 15 years ago, India now accounts for more than 40% of the global rice trade.
According to statistics, last year, India exported 22 million tons of rice to 140 countries. Therefore, the new move of the world's largest rice exporter immediately shook the global market, pushing rice prices up by about 20% compared to the level before India's ban.
In addition, extreme weather has severely affected production in the world’s leading rice granaries. This year, India’s monsoon season started late, with irregular and uneven rainfall patterns hampering farmers’ farming activities. The area under rice cultivation in India is estimated to be 6% lower than the same period in 2022. In Indonesia, farmers in the top rice-producing regions are switching to corn and cabbage to hedge against drought.
Thailand, the world’s second-largest rice exporter, is experiencing low rainfall this season, while bracing for a possible drought in 2024 due to El Nino. The Royal Irrigation Department said this year’s rainfall will be lower than the 30-year average. Water levels in major dams are down about 50% from 2022 levels. The Thai government is encouraging farmers to reduce rice acreage and switch to other crops to adapt to low rainfall conditions.
Many experts say that the rising price of rice has unpredictable consequences. Stating that the poor are the most vulnerable to food price shocks, Joseph Glauber, a senior fellow at the International Food Policy Research Institute, said that high rice prices affect the diets of billions of people in Asia and Africa, who rely on rice as a staple food.
The high prices and shrinking supply have raised the prospect of a new wave of trade protectionism as governments tighten export controls to preserve food reserves. Indeed, shortly after India’s ban, the United Arab Emirates (UAE) imposed a four-month ban on rice exports and re-exports, while Russia announced a temporary halt to exports of raw and processed rice until the end of the year to support its domestic market.
The record-breaking price of rice is putting enormous pressure on the already severely imbalanced global food system. According to the United Nations, more than 780 million people around the world are currently facing food shortages. This number is likely to rise further due to supply disruptions and price spikes.
According to Nhan Dan Newspaper
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