Billions of people in Asia and Africa affected by soaring rice prices

Rice is a staple food in the diets of billions of people in Asia and Africa. Rice contributes up to 60% of total calories for people in parts of Southeast Asia and Africa, and this proportion rises to 70% in countries like Bangladesh.

The latest price surge adds to tensions in global food markets already hit by severe weather and escalating conflict between Russia and Ukraine. Thai 5% broken white rice, the Asian benchmark, rose to $648 a tonne this week as dry weather threatened Thailand’s crop, and after top exporter India – which accounts for 40% of the world’s rice trade – banned exports of white rice (except long-grain aromatic basmati) to protect its domestic market.

“Higher rice prices will contribute to food inflation, especially for poor households in major rice-consuming countries in Asia,” said Joseph Glauber, a senior fellow at the International Food Policy Research Institute in Washington. Countries often follow suit when one country imposes an export ban, and the world’s poor are the biggest losers, he said.

Growing concerns about tighter global supplies are also raising the risk of a new wave of trade protectionism as governments seek to secure food reserves. The return of the El Niño weather phenomenon, which can cause drought and affect rice crops in Asia, is exacerbating those concerns.

Peter Timmer, a professor emeritus at Harvard University (USA) and a food security researcher, predicts that rice prices could increase by $100 per ton within 6 to 12 months. According to Mr. Timmer, the question now is “whether the price increase will be gradual, giving consumers time to adjust without panicking, or whether the price will suddenly increase to $1,000 per ton or higher.”

Most of the world’s rice is grown and consumed in Asia, where farmers are struggling with heat and drought. Thailand, the world’s second-largest rice exporter, is encouraging farmers to switch to crops that require less water, while farmers in Indonesia’s top rice-producing regions are planting corn and cabbage to weather the drought.

Meanwhile, Chua Hak Bin, senior economist at Maybank Investment Banking Group in Singapore, said the biggest risk is whether El Niño and climate change disrupt agricultural production and push up overall food inflation. This could trigger more protectionist policies, including export controls, which could exacerbate global food shortages and price pressures, he said.

Emerging market economies are more vulnerable to such food price shocks due to the larger weight of food in consumer baskets, but strict government-enforced price controls and food subsidies in many consuming countries can help contain inflation, Chua Hak Bin said.

According to VNA