“Situation Is Really Precarious”: World’s Largest Rice Exporter Faces Output Decline Amid Heatwave
The effects of elevated food prices have rippled worldwide and forced governments to impose price controls and trade restrictions. Price increases are due to supply constraints driven by several variables, including high energy prices, geopolitics, and weather. Ukraine restarted maritime transport of crops to the rest of the world, forcing grain prices to slip, though the food crisis is far from over.
We pointed out in April that the next challenge for the global food supply could be a plunge in rice production (read: here). Fast forward months later, and our suspicions appear to be right as India, the world’s largest rice exporter, has seen planting areas of the crop decline by 13% due to heatwaves and drought.
India accounts for 40% of the global rice trade, and a decline in production will complicate India’s domestic inflation fight. It could result in export restrictions, leading to few supplies for the rest of the world.
In the last two weeks, prices in India have soared more than 10% in top growing states such as West Bengal, Odisha, and Chhattisgarh due to lack of rainfall and crop output concerns, Mukesh Jain, a director at Sponge Enterprises Pvt., a rice trader, told Bloomberg. He expects export prices to reach $400 a ton by next month from $365 this week.
Rice feeds half of humanity and is vital for political and economic stability across Asia. Supply disruptions due to potential trade restrictions by India could create shortages and rising prices elsewhere.
There’s still hope crop output could recover as the monsoon season is expected to produce normal rainfall through September. However, some farmers sounded the alarm output is expected to drop significantly.
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