Who would have thought that the world would enter a global rice production shortage? The global rice market is set to log its largest downfall in 2 decades, according to Fitch Solutions.
“At the global level, the most evident impact of the global rice deficit has been, and still is, decade-high rice prices,” Fitch Solutions’ commodities analyst Charles Hart said.
Rice prices averaged $17.30 per cwt, (a unit of measurement for certain commodities) with predictions of only easing up to $14.50 per cwt in 2024.
“Given that rice is the staple food commodity across multiple markets in Asia, prices are a major determinant of food price inflation and food security, particularly for the poorest households,” Hart said.
According to CNBC reports, it is estimated that the global shortfall of rice for 2022-20233 would come in at 8.7 million tons, making it the largest global deficit since the 2003-2004 year.
India, the largest rice exporter globally, has restricted its broken rice exports to curb inflation. This move comes amid a demand-supply mismatch due to several global factors over the past three years, including the COVID-19 pandemic, the Russia-Ukraine War, sanctions on Russia, and China’s zero-COVID policy, leading to rising prices.
As central banks worldwide follow the U.S. Federal lead in raising lending rates to tackle inflation, experts warn of a possible global slowdown and recession.
In addition to these factors, India faces concerns over production due to below-average monsoon rainfall in key growing states. Consequently, in September 2022, India prohibited broken rice exports and imposed a 20% duty on other rice grades.
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