Global rice markets in crisis due to ‘artificial’ shortage

Rice is an essential staple food for more than half of the world’s population and the world is bracing for its worst shortage in 20 years.

India’s rice export ban takes its toll world rice markets, threatening food safety if developing countries cannot afford or access rice.

“The only shortage right now would really be the regular, white, long-grain, low-quality Indian rice that they ship to many countries in Africa and Southeast Asia,” said at CNBC Peter Bachmann, vice president of policy and government affairs. . “And when they put a ban in place, it hit these developing countries hardest and first.”

First, India banned exports of broken rice and imposed a 20% duty on exports of certain rice varieties in September 2022.

Then, in July 2023, India banned exports of its long-grain plain white rice.

“India is a country that has suffered significantly from food insecurity, so there is an understandable desire to ensure appropriate availability of staple foods like rice in the country,” said Will Kletter, vice president of operations. and strategy at ClimateAI, at CNBC.

“But there is a trade-off.”

India’s rice exports represent 40% of the market, so any export ban quickly influences global prices.

Rice prices rose 15 to 20 percent, reaching their highest level in nearly 12 years, according to the International Food Policy Research Institute.

“[India is] trying to get enough rice into their domestic markets so that their prices go down for consumers,” Bachmann said.

Part of the problem is that, despite the same increase in input costs for energy and fertilizer, compared to other agricultural products, market prices of rice have remained relatively stable.

U.S. rice farmers face the same volatile rice prices.

“Our farmers will take on any rice farmer,” Michael Klein, vice president of communications and national promotion at USA Rice, told CNBC. “But they can’t compete with foreign governments.”

As U.S. rice farms struggled to remain profitable when global rice prices failed to match rising input costs, Congress passed an additional $250 million in funding.

“These programs exist solely to prevent these farmers from falling through the cracks, because that would be a huge disaster,” Klein said.

Watch the video above to learn more about how global rice prices threaten affordable food, trade relationships and the livelihoods of millions of farmers.