Global Rice Prices Surge to 15-Year High Amidst Export Ban by India

Global Rice Prices Surge to 15-Year High Amidst Export Ban by India

VoM News Desk | September 9, 2023 | 05:42 PM IST | Breaking News, India | Follow on Google News

Global Rice Prices Surge to 15-Year High Amidst Export Ban by India. Image/NDTV

Paris, France: In a recent report, the Food and Agriculture Organization (FAO) has revealed that global rice prices experienced a remarkable surge in August, reaching a 15-year high. This dramatic increase is attributed to India’s decision to ban some overseas sales of rice, particularly Indica white rice, which had significant repercussions on the global rice market.

Trade Disruptions Lead to Price Escalation In August, while global food prices showed a declining trend, rice prices witnessed a sharp 9.8 percent rise compared to the previous month. The FAO emphasized that this spike was primarily a consequence of the trade disruptions resulting from India’s export ban on Indica white rice. The ban introduced a wave of uncertainty about its duration, triggering concerns over export restrictions. Consequently, supply-chain actors opted to hold onto stocks, renegotiate contracts, or cease making price offers, resulting in limited trade volumes and a focus on previously concluded sales.

Multiple Factors Contribute to Rice Price Surge Rice, as a staple food worldwide, has seen its prices soar due to various factors, including the COVID-19 pandemic, the Ukraine conflict, and the influence of the El Nino weather phenomenon on production levels. India’s ban, announced in July, covered non-basmati white rice, which accounts for a quarter of its total rice exports. The rationale behind this move was to ensure sufficient domestic availability and curb rising prices in the Indian market. India plays a significant role in the global rice market, accounting for over 40 percent of all rice shipments. As anticipated, this ban had adverse effects on several countries, including African nations, Turkey, Syria, and Pakistan, all of which were already grappling with high inflation.

International Agreements Seek Stability To mitigate the impact of India’s export ban, the Philippines, one of the world’s top rice importers, entered into a five-year agreement with Vietnam to secure rice imports.

Challenges in Rice Stocks and Future Harvests The FAO forecasts that world rice stocks will reach an all-time high of 198.1 million tonnes, with India and China holding the majority of this volume, as in previous seasons. However, global rice reserves held by other countries are expected to contract for the second consecutive year. The looming El Nino weather phenomenon poses a potential threat to future rice harvests, compounding the challenges faced by the rice market.

Global Food Prices Show a Decrease The turmoil in the rice market coincides with a gradual decrease in global food prices following the peak witnessed last year during the Russia-Ukraine conflict. In August, the FAO’s global food price index recorded an average of 121.4 points, marking a 2.1 percent decrease from July and a 24 percent decline from its peak in March 2022. Prices for cereals, meat, dairy, and vegetable oils all witnessed declines during this period. However, sugar prices experienced a 1.3 percent increase due to concerns related to the impact of the El Nino phenomenon on sugarcane crops and below-average rains in August, along with persistent dry weather conditions in Thailand.

Uncertain Future for Global Cereal Trade The FAO has revised its forecast for world trade in cereals for 2023 and 2024, projecting a 1.7 percent decline from the previous marketing season, totaling 466 million tonnes. Factors contributing to this decline include reduced exports by Ukraine due to trade disruptions resulting from the ongoing conflict. Moreover, the FAO has adjusted its forecast for world rice trade, considering India’s heightened export restrictions.

Prospects for Rice Trade in 2024 The FAO suggests that any recovery in the rice trade in 2024 is contingent upon multiple factors, including the duration of India’s export restrictions and the potential disruption of rice production in other Asian exporting countries due to the El Nino phenomenon. In light of these uncertainties, the outlook for the global rice market remains uncertain.

VoM News Desk

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