Global Rice Prices Reach 15-Year High Due To Indian Ban: FAO
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Rice is one of the major food staples used across the world by millions of people to cook up daily meals as well as festive ones. To meet this demand, South and Southeast Asian nations like India, Thailand, Vietnam, Pakistan and China export majority of their rice production. According to a recent report by the Food and Agriculture Organisation (FAO) of the United Nations, global rice prices have reached their highest in the last 15 years during the month of August, primarily due to India, the world’s largest rice exporter, placing a ban on some rice exports

For those unaware, India accounts for more than 40% of the global rice shipments, and in July 2023, the nation placed a ban on the exports of non-basmati white rice varieties. Because non-basmati white rice accounts for one-fourth of India’s total rice exports, the price for the same rose exponentially around the world. The Indian consumer affairs and food departments revealed in July that this ban on rice exports was being placed to manage the rise in domestic rice and food grain prices and to ensure adequate availability in the home markets. This ban can also be linked to the food price inflation India has been experiencing domestically with tomatoes, onions, ginger and other produce facing record price hikes. 

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The FAO revealed in its recent report that due to the trade disruptions caused by the Indian ban on non-basmati white rice exports, global rice prices in August rose by 9.8% compared to July. "Uncertainty about the ban's duration and concerns over export restrictions caused supply-chain actors to hold on to stocks, re-negotiate contracts or stop making price offers, thereby limiting most trade to small volumes and previously concluded sales," the UN agency said. The ban was expected to hit African nations, Syria and Pakistan the most, as these nations were already struggling with high inflation in their domestic markets. 

The FAO also said that global rice prices were shooting up over the last few years thanks to the COVID-19 pandemic, the war in Ukraine and then the El Nino weather phenomenon. Both India and China, two of the major rice exporters, hold nearly three quarters of the world rice stocks which is currently at 198.1 million tonnes. So, any restrictions placed by these nations affect the global prices of rice the most severely. The rice reserves currently held by the rest of the world, the FAO says, are expected to lead to a contraction in the global rice markets by the end of the year. 

Given that the El Nino effect might have a negative impact on the next harvests of major food crops, and that Russia pulled out of a deal that enabled Ukraine to ship grains in July, food prices are expected to be severely impacted in the coming months. "Traded volumes of wheat and maize are all predicted to decline, due to a mix of reasons, including falling exports by Ukraine due to trade disruptions associated with the ongoing war," the FAO report said.