Tanutkij Wangsittidej Food prices have been rising in recent months. And rice, a staple food in much of Asia, could be next, industry observers have said. Prices for many foods, ranging from wheat and other grains to meat and oils, have skyrocketed. This is due to a number of factors, including rising fertilizer and energy costs last year, as well as the Russia-Ukraine war. Prohibitions or serious disruptions to food exports include those from India (wheat), Ukraine (wheat, oats and sugar, among others) and Indonesia (palm oil). Rice could be next in line. The Food and Agriculture Organization of the United Nations Food Price Index is already showing international rice prices rising for a fifth straight month to a 12-month high, according to the latest May data released last week. Certainly, rice production is still plentiful, experts said. But rising wheat prices and generally higher agricultural costs would make rice prices worth watching later. So there is an argument to say… if the market shows an increase in price, then why not farmers take advantage of the increased prices? Nafees Meah International Rice Research Institute “We need to monitor rice prices in the future, because rising wheat prices could lead to some rice substitution, increased demand and reduced existing stocks,” said Sonal Varma, chief economist at the Japanese bank Nomura.
Danger of protectionism
The safeguards are “actually exacerbating global price pressures for a variety of reasons,” he told Street Signs Asia on CNBC. The cost of feed and fertilizer for agriculture is already rising and energy prices are increasing transport costs, he added. “So there is a risk of seeing more protectionism from countries,” Barma said. However, he argued that the risks to rice remain low as global rice stocks are plentiful and the harvest in India is expected to be good this summer. “At the moment, I’m much more concerned about India imposing a ban on rice exports in the coming weeks – as it has been thinking after wheat and sugar,” David Laborde, a senior fellow at the International Food Policy Research Institute, told CNBC. . India and China are the world’s top two rice producers, accounting for more than half of the world, according to the World Economic Forum. Vietnam is the fifth largest, while Thailand is in sixth place. India imposed export bans on wheat in May, citing the need to “manage the country’s overall food security”. It also imposed restrictions on sugar a few days after the wheat ban.
Are price increases preferable?
Laborde said a price increase would be much preferable to any export ban. “We really need to differentiate between a price increase that offsets the higher costs and benefits farmers (and helps them produce), from an export ban” that pushes prices up on world markets but pushes prices up. down in domestic markets, he said. Nafees Meah, regional representative for South Asia at the International Rice Research Institute, added that rising energy costs make up a large part of the cost of rice production. “So there is an argument to say… if the market shows an increase in price, then why not give farmers a benefit from the increased prices?” Nafees told CNBC’s “Squawk Box Asia.” But a rise in rice prices would badly affect many in Asia, which is the largest consumer of the staple product. “So in the region of Southeast Asia, countries like East Timor, Laos, Cambodia and natural places like Indonesia, which [has a] “A very large population, and many of whom are food insecure, will be very badly affected if prices continue to rise and remain at these very high levels,” Nafees said.
Far above pre-pandemic levels
The UN Food Price Index shows that prices are now 75% above pre-pandemic levels, said Frederique Carrier, chief executive officer and chief investment strategist at RBC Wealth Management. “The pandemic associated with the pandemic and Russia’s invasion of Ukraine have exacerbated the situation by both reducing food supply and further increasing energy prices,” she wrote in a report in June. About a third of the cost of producing food is related to energy, Carrier said. Fertilizers in particular are very energy-intensive to produce and prices have skyrocketed since last year.
