close up photo of assorted rice

Global Rice Prices Soar to 12-Year High, with Thailand at the Helm: UN Report

Global rice prices have surged to their highest levels in almost 12 years, according to the Food and Agriculture Organization of the United Nations (FAO), triggered by India’s suspension of rice exports and inclement weather conditions that have impacted production prospects.

The FAO’s global grain price index recorded a significant uptick of 2.8 percent in July, reaching 129.7 points. Notably, this figure marks a 19.7 percent increase from the same period last year, marking the highest point since September 2011. The most substantial escalation in rice prices has been observed in Thailand.

The FAO’s report underscores growing apprehensions regarding the influence of El Niño on rice-producing nations, which have contributed to mounting concerns about rice production. The report states, “Concerns about the impact of El Niño on the production of some rice-growing countries are growing. This is why the price of rice has increased. In addition, rice production has been affected by heavy rain and the unstable quality of Vietnam’s rice, which is still in the process of harvesting in the summer and autumn.

“India, a key player in the global rice market, implemented an immediate ban on the export of white rice, with the exception of Basmati rice, on July 20. This move aims to ensure sufficient rice availability for domestic consumption and counteract the surge in domestic rice prices. The FAO highlights that India contributes over 40 percent of the world’s rice exports, making its export restrictions a cause for concern in terms of global food security.

In response to the situation, a senior analyst at Robobank conveyed to CNBC that the upward trajectory of rice prices is likely to continue. The FAO’s World Rice Price Index is anticipated to surpass July’s levels in August this year.

India’s suspension of white rice exports (excluding Basmati) coincides with a period when major rice producers globally are grappling with significantly diminished rice stocks. This scarcity is especially pronounced in the Asian region.

The director of the Asian region at The International Potato Center emphasized that further rice price hikes are foreseeable if importing nations initiate efforts to stockpile rice to bolster domestic food security. The scenario could be exacerbated if other rice-exporting countries follow India’s lead in implementing measures to regulate rice exports.

Meanwhile, Thailand, the world’s second-largest rice exporter, is actively encouraging its domestic farmers to reduce rice cultivation in a bid to conserve water resources. This strategic move is poised to exert a significant influence on the global rice market, especially in light of India’s recent ban on rice exports.

As the world grapples with surging rice prices and their repercussions, the global food security landscape stands at a critical juncture. How countries navigate the complex web of supply, demand, and regulatory actions will significantly shape the trajectory of rice prices in the coming months.

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