• Sunday, Jun 11, 2023
  • Last Update : 06:33 pm

Coronavirus: Global rice prices surge to 7-year high

  • Published at 11:12 am April 9th, 2020
File photo shows different varieties of rice displayed at a shop in Dhaka Mehedi Hasan/Dhaka Tribune

Food industry associations have urged countries corcerned to keep trade open

The price of rice has hit 7-year highs because of the coronavirus pandemic.

The reason for this is because the importers have started stockpiling the grain as shipments were curbed by exporters, reports CNBC.

The price of 5% broken white rice, which is the industry benchmark, increased 12% from March 25 to April 1, leading to the highest price since late April 2013, the Thai Rice Exporters Association said quoting Reuters data. 

The increase in price is because of the expectations of higher demand for Thai rice after the two top exporters India and Vietnam faced export disruptions due to the outbreak of the the novel coronavirus disease. 

Asia is the largest producer (90%) of rice in the world and consumes the same amount, the report added.

CNBC said rice traders in India have stopped signing new export contracts because of shortages of labout and logistical disruptions, Reuters reported, citing industry officials. 

On the other hand, the Vietnamese government has put in restriction in export of the staple.

Rice prices started climbing in late 2019 due to a severe drought in Thailand and strong demand from Asian and African importers, which was way before the March spike; Thailand is the world's second-largest exporter of rice after India.

Despite expectations of huge production this crop year and carry-over stocks of rice and wheat being at all-time highs, the rice price is the highest now, Samarendu Mohanty, Asia regional director at the Peru-based International Potato Centre said.

The report further said Thai Rice Exporters Association said that rice stocks rice stock was ample, but acknowledged difficulties of labour shortages amid the pandemic after Cambodian labourers went home due to a nationwide lockdown.

The impact would affect seasonal farming activities difficult and future harvests will be affected also, Mohanty in a blog post said.

"Unlike other sectors, agriculture is heavily affected because of the lockdown,” he wrote.

"If the planting season is missed, there will be no crop for the season or for the entire year,” Mohanty further added.

North America, Europe and China are now facing labour shortages and supply line disruptions for the spring planting, he added. "If the time slot is missed, they are done for the entire year."

The CNBC report further said, it is harvest time for winter crops in the other parts of the world including India and other South Asian countries. The crops include wheat, potato, cotton and some fruits and vegetables. 

But farmers need migrant workers to operate machinery and perform other manual work for the produce.

The International Grain Council said in a recent report that buying of some commodities accelerated in recent weeks while logistical challenges were being reported as movement constraints and quarantine measures became widespread. 

It also acknowledged a sharp upturn in near-term demand, especially for rice and wheat-based foods.

Prices of wheat high as well

The prices of wheat, a grain which is used in making pasta and bread, also rose.

Benchmark wheat futures on the Chicago Board of Trade, earlier this year was hit by the coronavirus pandemic, but it saw price gains since mid-March.

The price increased by about 15% in the second half of March due to panic buying and crop concerns continues to arise  from lockdowns in North America and Europe.

Fitch Solutions in a note mentioned that rice and wheat prices will remain supported in the coming weeks, due to the Covid-19 pandemic.

Although prices of wheat and rice are currently low in absolute terms as compared to historical averages, they are still significantly higher on-year, it noted.

The note further added that the food price inflation will accelerate further in 2020, continuing on from 2019 when the African Swine Fever outbreak led to a prolonged spike in meat prices.

Food industry associations and organizations have urged countries to keep trade open.

"One cannot blame countries for ensuring their domestic food security during this trying time, but countries need to be extra careful in taking unnecessary policy measures that could create panic in the market,"  Mohanty said.

He said:  "Countries should be aware that enough grains exist in warehouses to feed the world for more than four months. But these grains are of no use if countries resort to trade restrictions."