Rice Prices Soar Close to 12-Year High According to the United Nations’ Food Agency
Rice prices surged to their highest in almost 12 years, according to the United Nations’ food agency. The price surge was seen after India’s rice export ban and adverse weather conditions that may have hampered production.
The Food and Agriculture Organization All Rice Price Index for July showed that it rose by 2.8% to 129.7 points. The figure is up 19.7% compared to a year ago. Additionally, the data from FAO showed that it was the highest nominal value since September 2011, with Thailand displaying the sharpest increase in price.
“Concerns over the potential impacts of El Niño on production in some suppliers provided further underpinning to prices, as did rain-induced interruptions and quality variability in Vietnam’s ongoing summer-autumn harvest,” the report stated. El Niño is a climate phenomenon marked by extreme temperatures and weather conditions that could interrupt lives and livelihoods.
In July, India, the world’s leading rice exporter, banned exports of non-basmati white rice as the government seeks to keep a cap on soaring food prices in the country and ensure that there are enough supplies domestically “at reasonable prices.” India accounts for more than 40% of the global rice trade.
The FAO noted that India’s export restriction “raises substantial food security concerns for a large swathe of the world population,” even if it affects a potion of India’s overall rice shipments.
Rice prices are hovering at decade highs, with rough rice futures as the last trading recorded was at 16.02 USD per hundredweight (cwt).
The prices could also climb higher. Oscar Tjakra, senior analyst at global food and agriculture bank Rabobank stated, “We will most probably see a higher FAO rice price index for August 2023 vs July 2023.” He further said that India’s non-basmati white rice export ban came at a time of seasonal low inventories in major global suppliers of rice, especially in Asia.
Prices could surge further if other countries follow suit in implementing export restrictions.
“The prices can go even much higher if importing countries try to stockpile rice for domestic food security, and exporting countries put export restrictions,” said Samarendu Mohanty, Asian regional director at International Potato Center.
El Niño could further exacerbate risks to global production in other major Asian rice-producing countries such as Thailand, Pakistan, and Vietnam. According to studies, rice is a highly vulnerable crop that has the highest probability of simultaneous crop loss during El Niño. Furthermore, Thailand is now encouraging its farmers to plant less rice in a bid to save water as a result of low rainfall.
