Global food supply faces fresh turmoil with rice set to climb

BANGKOK: Food supply, already squeezed by shortages in wheat, corn and cooking oils, is at risk of even more disruption, this time from the rice market.

India is clamping down on exports of the staple for half the world’s population, with the market’s focus now turning to the capacity of other major producers including Thailand and Vietnam to fill the gap.

The restrictions are threatening to ignite inflation for yet another key commodity, and may deprive some of the globe’s poorest nations of a crucial element of their diet.

India is the single largest exporter with a 40% share of global rice trade. The government has imposed a 20% duty on shipments of white and brown rice, and banned broken rice sales abroad.

Those varieties mainly go toward feeding Asia and Africa and affect roughly 60% of India’s overall rice exports.

“Such severe disruptions in global supplies, combined with a record level of consumption worldwide, should supercharge prices and further fuel food inflation,” said Sabrin Chowdhury, head of commodities at Fitch Solutions.

When the war in Ukraine sent agricultural prices skyrocketing earlier this year, rice escaped the frenzy, keeping Asia and some Middle Eastern and African nations insulated from a bigger food crisis.

The surge in corn and wheat encouraged some substitution away from these more expensive grains toward cheaper alternatives like rice. That may be about to change.

India’s policy will drive up its export prices to levels similar to white rice grades from rivals Thailand and Vietnam, prompting buyers to shift toward those suppliers instead, according to Chookiat Ophaswongse, honorary president of the Thai Rice Exporters Association.

When that happens, it will push up Thai and Vietnamese prices as well, dealing a blow to importing nations in Asia and Africa that consume the grain as a main staple, Chookiat said.

“Imposing a 20% levy is a big deal,” he said. “This move will cause global rice prices to rally.”

Thailand’s benchmark 5% white rice was quoted at US$431 (RM1,939) a tonne this week by the exporters association, while the same grade from Vietnam was US$393 to US$397 (RM1,768 to RM1,786) a tonne.

India’s prices were well below that at US$338 to US$342 (RM1,520 to RM1,538).