Akash Jha
The Indian government has shaken up the rice market in a matter of weeks.
since a result, countries from Asia to West Africa are panicked, since the world’s leading shipper has imposed limits on all of its exports. There have been attempts to calm the market by other large farmers to ensure consumers that there is a sufficient supply of rice.
After India enacted further restrictions on parboiled and basmati rice the previous weekend, Asian rice prices spiked on August 30 to near their highest level in almost 15 years. A recent campaign of tightening that began on July 20 with a prohibition on the shipment of specific grains culminated with the elimination of the last remaining types that were not subject to export restrictions.
Peter Timmer, emeritus professor of food security at Harvard University, has spent decades studying the effects of fluctuating food prices. At this time, the biggest worry is whether or not Thailand and Vietnam will implement strict regulations on rice exports like India has. Should this occur, the price of rice around the world would skyrocket to well over $1,000.
It’s natural to be concerned about availability. As much as 60% of the calorie intake for people in some parts of Southeast Asia and Africa comes from rice, making it an essential part of their diets. The current benchmark price is $646 per ton, but meteorological conditions have the potential to cause significant fluctuations.
Thailand has already warned of drought conditions in early 2024, and this year’s El Nio could dry up several of Asia’s most important growing regions. Although the crop in China, the world’s largest producer and importer, seems to have avoided bad weather so far, important growing areas in India still require additional precipitation.
Policymaking in India is purely political. Voters may be very harsh at the polls if food costs continue to rise ahead of an election that Prime Minister Narendra Modi’s government must prepare for early next year. We can see the effects of the curbs.
Delhi rice prices were Rs 39 per kilogram on August 31, unchanged from July when exports were banned. This was nevertheless higher than the previous year. There has been a minor increase across the country. The restrictions in India, however, are having an effect beyond its borders.
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Following allegations of hoarding and a “alarming” surge in retail prices, the Philippines imposed a nationwide rice price cap last week. In terms of volume, the country is the world’s number two importer of the grain.
The diplomatic option is being chosen by other concerned states.
As a result of the South Asian country’s inclusion of a food security provision while prohibiting one species, Guinea has dispatched its trade minister to India, and Singapore, Mauritius, and Bhutan have all asked Delhi to exclude them from the limitations. The limitations have also given Thailand a chance to advance.
The Philippines, Indonesia, Malaysia, and Japan have all hosted representatives from the world’s second-largest shipper in recent weeks. The note read, “If you want rice, we have it.”
Supporting the market, Vietnam said last month that it is likely to exceed its export target for the year, something it could do without compromising its own food security. From January through July of this year, customs data shows a dramatic increase in volumes shipped to Indonesia and a similar trend in shipments to China. There has been a recent softening of ambition in Myanmar.
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The government rejected a proposal from the country’s rice federation to temporarily halt shipments in an attempt to curb increasing domestic prices. Just recently, the Federation announced that it may send more ships out.
Following its weekly meeting on August 30, the Thai Rice Exporters Association is scheduled to update its white rice 5 percent broken price, and investors will be watching the Asian benchmark to determine whether or not calm or concern is trending.
