Rice prices have surged to their highest levels in nearly 12 years, driven by India’s export ban and adverse weather conditions affecting production, according to the United Nations’ Food and Agriculture Organization (FAO).
The FAO All Rice Price Index for July rose by 2.8%, reaching 129.7 points. This figure is up 19.7% from a year ago, marking the highest nominal value since September 2011, with Thailand seeing the sharpest price increases.
The rise in prices is partly due to concerns about the El Niño phenomenon, which could disrupt rice production in several key supplier countries.
Additionally, interruptions and quality issues in Vietnam’s summer-autumn harvest due to heavy rains have contributed to the price hike. El Niño is known for causing extreme weather conditions that can severely impact agriculture.
Global rice prices surge as weather disruptions and export restrictions impact supply.India, the world’s largest rice exporter, imposed a ban on non-basmati white rice exports on July 20 to control domestic food prices and ensure local supply stability.
This restriction affects over 40% of global rice trade, raising significant food security concerns worldwide. The ban, combined with seasonal low inventories in other major rice-exporting countries, has pushed rough rice futures to $16.02 per hundredweight (cwt), with prices potentially rising further.
Oscar Tjakra, a senior analyst at Rabobank, predicts that the FAO rice price index for August will likely surpass that of July. He notes that India’s export ban coincides with low global rice stocks, exacerbating the situation. If other countries implement similar export restrictions or increase stockpiling, prices could rise even more.
Further complicating the situation, Thailand, the world’s second-largest rice exporter, is advising farmers to reduce rice planting to conserve water due to insufficient rainfall.
The combined effects of El Niño and these export restrictions could lead to even higher global rice prices in the coming months.