Why rice prices are at a 15-year high
Rice prices have reached a fresh 15-year high, fueled by strong demand and ongoing supply concerns. Thai white rice, an Asian benchmark, rose for the third consecutive week to $659 a ton, marking the highest price since October 2008. This year, prices have increased by about 38% due to a convergence of factors which we decode in the article.
Rice export curbs by India
Rice prices worldwide are increasing because India, the largest rice exporter globally, responsible for around 40% of rice in the world market, imposed restrictions on exports of rice. The country banned the shipping of white rice and enforced a 20% export tax on parboiled rice. Additionally, strict pricing regulations were implemented, setting the bar at $950 a tonne for registering basmati export consignments. India enforced these restrictions because its kharif rice production began dropping significantly, impacted by adverse weather conditions.
Impact of El Nino
The production was hit by the impact of El Nino, which resulted in August being the driest period in the past 120 years. June also saw poor rainfall. Indonesia and Thailand, other major exporters, were also affected by El Nino, leading to drought and prolonged dry periods in Asia. Rice prices are likely to stay high in the coming couple of months because the new crop in Asia isn't expected until February-March.
Countries ramp up purchases amid fears of tightening supplies
Some countries are increasing purchases to build sufficient stockpiles amid concerns that El Nino's impact will further tighten supplies in the coming months. Indonesian President Joko Widodo announced that Thailand will deliver up to two million tons next year, while India has agreed to supply one million tons. The El Nino weather phenomenon, which brought dryness to large parts of Asia this year, is forecast to continue in the first half of 2024, as per Reuters.
India to sell rice under 'Bharat' brand at Rs. 25/kg
To combat rising rice prices, the Indian government plans to sell affordable rice under the 'Bharat' brand at Rs. 25 per kilogram. This will be sold through National Agricultural Cooperative Marketing Federation of India (NAFED), National Cooperative Consumers' Federation (NCCF), and Kendriya Bhandar outlets. The government already sells wheat flour and pulses under the Bharat brand.
