The price of rice, which soared to its highest level in 15 years, after restrictions imposed by India on exports of the grain, foreshadows how climate change will disrupt the world’s food supply, according to experts.
Rice prices jumped 9.8% in August, offsetting declines in other commodities, the Food and Agriculture Organization (FAO) said last week.
It was the announcement in July by India, which represents 40% of world rice exports, of a ban on sales of non-basmati rice abroad, which ignited the powder.
New Delhi justified this measure by a surge in rice prices on its domestic market caused by geopolitics, the El Niño climate phenomenon and “extreme weather conditions”.
This year is expected to be the hottest ever experienced by humanity and the impact of El Nino could make the situation even worse.
Despite severe flooding in parts of the north, this August was the hottest and driest on record in India. The monsoon, which brings up to 80% of the country’s annual rainfall, was much lower than normal.
The restrictions decided by New Delhi follow an embargo last September on exports of another variety of rice, an essential food in certain regions of Africa.
Up to 8% of global rice exports for 2023-2024 could now be taken off the market, according to an analysis by BMI, part of the Fitch ratings agency.
Fears of drought
For now, the crisis has offered an opportunity for Thailand and Vietnam, the world’s second and third largest exporters, to increase their exports.
The drought that accompanies El Niño could threaten harvests, worries Elyssa Kaur Ludher of the Southeast Asia Climate Change 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 Niño, a natural weather phenomenon, typically lasts nine to 12 months and is expected to strengthen late this year.
Even before India’s restrictions, its effect was driving up rice export prices, according to BMI.
In Thailand, rainfall is currently 18% lower than forecast for the period, the National Water Resources Authority said in September. Late rains could still make up the deficit, but the agency says it is “concerned” about an El Niño-induced drought.
“New normal”
The impact is more on prices than on supply, notes Charles Hart, agricultural commodities analyst at Fitch Solutions. “We are not witnessing a period of rice shortage.”
This situation is likely to drain stocks replenished after the COVID-19 pandemic and encourage importers to obtain new agreements and impose limits locally.
The Philippines, a major importer, has just signed an agreement with Vietnam to stabilize supply, a few days after announcing a price cap.
Indonesia, for its part, has significantly increased imports from neighboring countries since the start of the year. The objective is to stabilize the price of rice for Indonesians after the disruptions linked 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,” stressed 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” to which leaders must be attentive, notes Elyssa Kaur Ludher.
Climate change can lower productivity, with agricultural yields falling as temperatures rise, but it also increases the likelihood of extreme events like the 2022 floods in Pakistan.
“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 seeding models, underlines Avantika Goswami, climate change researcher at the Center for Science and Environment.
“Raggy weather is the new normal,” she warns.