Supply disruptions in global rice supply shift demand

GLOBAL— Severe disruptions in India’s Pakistan’s and Europe’s rice suppliers combined with a soaring demand for the grain could break the fragile balance between supply and demand, leading to price increases and, once again, supercharging global food inflation. 

India has moved to curb its broken variety of rice exports, together with a 20% levy on other rice types, which has pushed off-balance domestic and international suppliers of the commodity.

India is the largest rice exporter, with a 40% share of the global trade of rice, with 60% of its exports going to Asia and Africa. With less rice leaving India, these regions are facing severe rice shortages. 

In Pakistan, the fourth largest rice exporter in the world, producing seven million metric tons of rice and exporting four million, a cataclysmic monsoon is ravaging over half of the crops in the province producing a third of the country’s rice, according to FAO.

With the unprecedented floods, farmers have lost most of the seeds for the next planting season starting in October, and if they don’t recede, the October-December winter crop might be lost.

Severe drought in Europe has also affected Italy’s paddy fields (which produce 1.5 million tons of rice); with no water for irrigation, the Po river’s 4,000 rice farms will have severely diminished outputs.

Northern Italy, which supplies half of the EU rice has not had substantial rains since November 2021. “The drought is devastating the Italian rice fields with estimated losses of over 30% of the harvest at a time when the record increase in production costs caused by the war in Ukraine has already cut sowing by ten thousand hectares nationwide,” according to Italian farmers association Coldiretti.

Demand shift could hike prices

Vietnam and Thailand, the second and third biggest exporters, will see increased demand, but if the demand shifts too fast and is overblown, rice prices will soar in the two countries. 

According to the Thai Rice Exports Association, it will cause rice prices to rally. Nevertheless, the body doesn’t think that Thailand will apply restrictions on exports.

The two countries have been trying to push global rice prices up for a while now, officially partnering last month to boost the commodity prices. 

“If the situation continues, farmers will turn to growing other crops that generate higher income, leading to a decline in rice production with its greater impact on global supply of food,” says Le Minh Hoah, agriculture minister of Vietnam.

According to the Thailand government, the country exported 4.09 million tons of rice in the January-July period – up 54% from a year earlier. A favorable monsoon season has boosted rice production in the country.

Vietnam expects to reach 7 million metric tons of exported rice this year, a similar number to the Thailand one (7.5 million metric tons).

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