Adverse weather conditions affecting Asia’s main rice suppliers, including top exporter India, threaten to cut production of the world’s most important staple food and fuel food inflation, which is already approaching record levels, writes Reuters

Over the past two years, rice has bucked the upward trend in food prices amid bumper harvests and high exporter inventories, even as COVID-19, supply disruptions and, more recently, the conflict between Russia and Ukraine have that other grains become more expensive.

But poor weather in exporting countries in Asia, which provide about 90 percent of the world’s rice production, is likely to change the trajectory of prices, traders and analysts said.

Global rice supply affected by weather

“There is upside potential for rice prices, with the possibility of production declines in major exporting countries,” said Phin Ziebell, agribusiness economist at National Australia Bank.

“An increase in the price of rice would add to the already major challenges to food affordability in some parts of the developing world,” Ziebell told Reuters.

Erratic rains in India’s grain belt, a heat wave in China, floods in Bangladesh and declining quality in Vietnam could reduce yields in four of the world’s top five rice producers, farmers, traders and analysts told Reuters.

Main rice producing states

India’s main rice-producing states of Bihar, Jharkhand, West Bengal and Uttar Pradesh have seen a monsoon rainfall deficit of up to 45 percent so far this season, data from the state meteorological department shows.

This has led, in part, to a 13 percent decline in rice planting this year, which could result in production falling by 10 million tons, or about 8 percent from last year, BV Krishna said Rao, president of the All India Rice Exporters Association.

The area under rice also declined as some farmers shifted to pulses and oilseeds, Rao said.

How much rice is grown in India?

India’s summer-sown rice accounts for more than 85% of annual production, which has risen to a record 129.66 million tonnes in the crop year to June 2022.

“A drop in production is certain, but the big question is how the government will react,” said a Mumbai-based dealer.

Rice stocks in India as of July 1 totaled 55 million tonnes, against a target of 13.54 million tonnes.

This has kept rice prices low over the past year, along with India’s record shipments of 21.5 million tonnes in 2021, higher than the total shipped by the world’s next four largest exporters – Thailand, Vietnam, Pakistan and the United States United.

“But the government is price sensitive. A small increase could prompt him to impose export restrictions,” the trader said.

Rice, affected by rains and heat

In Vietnam, rains during harvest affected grain quality.

China, the world’s largest consumer and importer of rice, has suffered yield losses due to extreme heat in the grain-growing areas and is expected to lift imports to a record 6 million tonnes in 2022/23, according to the Department American of Agriculture.

China imported 5.9 million tons a year ago.

Flood damage

The world’s third-biggest consumer, Bangladesh, is also expected to import more rice following flood damage in its main rice-producing regions, traders said.

Analysts or government agencies, which often release production data only later in the year, have not yet estimated the full extent of deficits in countries other than India.

But the impact of poor crop weather can already be seen in the slight rise in export prices from India and Thailand this week.

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