International Rice Prices Reach 15-Year High as India’s Export Restrictions Take Effect
According to the latest data released by the Food and Agriculture Organization of the United Nations (FAO), international rice prices have continued to rise. The FAO cereal price index fell by 0.7% month-on-month in August, while the FAO rice price index rose by 9.8% month-on-month during the same period. This surge has brought rice prices to a 15-year high.
India, the world‘s largest rice exporter, plays a significant role in global rice trade, accounting for around 40% of global exports. In July, India implemented a ban on rice exports, except for parboiled rice and basmati rice, in order to ensure sufficient supply in the domestic market. This move disrupted the global rice trade. To compound the issue, in late August, India implemented further measures, including imposing taxes and setting a minimum export price for rice. India’s export restrictions are a major contributing factor to the rising international rice prices.
In addition to India, other countries such as the United Arab Emirates and Russia have also implemented rice export restrictions. The El Niño phenomenon, which may affect rice production in some regions, has further contributed to the continual rise in rice prices.
Expressing their concerns, experts believe that a pattern of tight international rice supply has emerged, with uncertainties surrounding the duration of the export ban potentially leading to even higher international rice prices. However, the impact of these rising prices on global food security is expected to be limited due to factors such as the rice consumption regions and emergency rice reserve mechanisms of countries like ASEAN, China, Japan, and South Korea.
China, being the world‘s largest rice consumer, producer, and a major rice importer, is relatively unaffected by the rising international rice prices. The country has achieved absolute self-sufficiency in rice and has ample stocks. Additionally, the current rice production situation in China is favorable, further limiting the impact of the fluctuations in international rice prices.
India’s export restrictions have undoubtedly driven the increase in international rice prices. Since February 2020, global rice prices have displayed an upward trend, rising for five consecutive months. The FAO rice price index rose by 9.8% in August alone, reaching a 15-year high.
Li Guoxiang, a researcher at the Institute of Rural Development of the Chinese Academy of Social Sciences, explained that India’s change in rice export policies has played a significant role in this recent surge. India has experienced rice surpluses and low prices in previous years. However, natural disasters severely affected rice production last year, causing domestic rice prices to rise. As a result, India has reduced rice exports through measures such as increasing export prices. This shift in the international rice supply chain has led to an increase in rice prices worldwide.
Other rice-exporting countries like the United Arab Emirates and Russia have also imposed export restrictions. Vietnam remains the only major rice producer in Southeast Asia with potential for export growth. However, weather conditions may affect its output, while Thailand’s output is expected to decline.
As a result of these factors, the international rice supply is expected to remain tight, leading to further price increases. The impact of rising rice prices on global food security is limited, with only specific nations and regions vulnerable to fluctuations in international food prices.
In regard to China’s rice supply, the price has remained stable due to favorable rice production conditions and seasonal factors. The recent rise in rice prices can be attributed to factors such as “bad rain” during the summer grain harvest and tight supply before the new crop harvest. However, the overall impact on China remains limited.
China is the largest rice consumer and producer globally, accounting for approximately 28% of global rice production and consumption. With leading rice yields, China’s rice production significantly contributes to its overall food supply. The country’s rice sown area and output during the “Thirteenth Five-Year Plan” period accounted for around 25.8% and 31.9% of food crops, respectively. With a focus on ensuring absolute food security, China’s rice supply is sufficient to withstand the impact of rising international rice prices.