Experts say the price of rice, which has risen to its highest in 15 years after India imposed export curbs on the grain, is a harbinger of how climate change will affect global food supplies.
• Also read: After export bans from India, rice is at its highest level in 15 years, says FAO
Rice prices rose 9.8% in August, offsetting declines in other commodities, the United Nations Food and Agriculture Organization (FAO) said last week.
It was the announcement in July by India, which accounts for 40% of global rice exports, that it would impose a ban on sales of non-basmati rice abroad that sparked the dispute.
New Delhi justified this measure by citing a geopolitical increase in rice prices in its domestic market, the El Niño climate phenomenon and “extreme weather conditions”.
This year is expected to be the hottest year humanity has ever experienced, and the effects of El Niño could make the situation even worse.
Despite severe flooding in parts of the north, this August was India’s hottest and driest on record. The monsoon, which accounts for up to 80% of the country’s annual rainfall, was well below normal.
The restrictions imposed by New Delhi follow an embargo last September on the export of another type of rice, a vital food in certain regions of Africa.
According to an analysis by BMI, part of the ratings agency Fitch, up to 8% of global rice exports could now be withdrawn from the market for 2023/24.
Fear of drought
For now, the crisis offers Thailand and Vietnam, the world’s second and third largest exporters, an opportunity to increase their exports.
The drought associated with El Niño could threaten crops, fears Elyssa Kaur Ludher from the Southeast Asia Climate Protection Program at the ISEAS-Yusof Ishak Institute.
“I think the end of this year and especially the beginning of next year will be very, very difficult,” she warns.
El Nino, a natural weather phenomenon, typically lasts nine to 12 months and is expected to strengthen by the end of this year.
Even before India’s restrictions, according to the BMI, they drove up rice export prices.
Thailand is currently receiving 18% less rainfall than forecast for this period, the National Water Resources Authority said in September. Later rains could still make up the deficit, but the agency says it is “concerned” about a drought caused by El Niño.
“New Normal”
The impact is more on prices than supply, notes Charles Hart, agricultural commodities analyst at Fitch Solutions. “We are not experiencing a period of rice shortage.”
This situation is likely to deplete stocks refilled after the Covid pandemic and encourage importers to enter into new agreements and impose local restrictions.
The Philippines, a major importer, just signed an agreement with Vietnam to stabilize supplies, days after announcing a price cap.
Indonesia, in turn, has significantly increased imports from neighboring countries since the beginning of the year. The aim is to stabilize the price of rice for Indonesians after the disruptions related to climate change and India’s decision.
“We want to strengthen our strategic rice reserves, but even imports are complicated, which was not the case before,” emphasized Indonesian President Joko Widodo.
But for the poorest, high prices mean less food. “It is also a question of social stability, it is a political question” that leaders need to pay attention to, notes Elyssa Kaur Ludher.
Climate change may reduce productivity as agricultural yields decline as temperatures rise, but it also increases the likelihood of extreme events such as the 2022 Pakistan floods.
“Global grain export markets are relatively concentrated, so this type of extreme weather risk is concentrated in a few markets,” adds Charles Hart.
In India, authorities need to develop better warning systems and new sowing models, emphasizes Avantika Goswami, climate change researcher at the Center for Science and Environment.
“Bad weather is the new normal,” she warns.