Located in Asia, India is the largest rice exporter in the world and commands around 40% share in the global rice trade. With increased demand from overseas buyers, prices of Indian rice rose in the current week. The prices have also soared up due to the Government of India’s procurement of rice from domestic rice millers.
Rise In Domestic Prices
The rates of India’s 5% broken parboiled variety rose to $373-$378 per tonne from the previous week’s $370-$375, amid higher export demand and high domestic requirements. (The GOI shifted its policy on exports of broken rice from “free” to “prohibited”)
“The government has been buying new season paddy crops at revised higher prices. Exporters need to pay more to secure supplies,” as per an exporter based in Kakinada, Andhra Pradesh.
With a view to boosting acreage and increasing output, the Government of India raised the price at which it will buy the new-season common paddy from farmers by 5.2%, the biggest such increase witnessed in five years.
Farmers In a Few Countries Benefit From High Prices
The output from the neighboring country of Bangladesh’s second-biggest rain-fed rice crop has an expectation to hit 17 million tonnes, which would exceed the target of 16 million tonnes, as farmers raised acreage to cash in on the higher prices being offered, a senior agriculture ministry official said.
This is despite the fact that Bangladesh has been struggling to shore up stocks following widespread flooding.
The prices of Thailand’s 5% broken variety scaled the highest since early October at $410-$425 per tonne and the increase was attributed to gains in the local currency, i.e. baht, which had decreased the margins of the exporters from overseas sales and in turn prompted them to hike prices.
Vietnam’s 5% broken rice prices remained unchanged at $425-$430 per tonne, free-on-board. “Demand for Vietnamese rice is higher than previously anticipated and I think this year’s exports will exceed the official target of 6.3-6.5 million tonnes,” a Ho Chi Minh City-based trader said.
Reason For Incline
“Global markets have slowed as few countries have stocked up on rice from their experiences during the pandemic and war between Russia and Ukraine, which has led to hoarding,” as mentioned by a Bangkok-based trader.
Since the outbreak of the pandemic, the world has witnessed a major global food supply crunch due to environmental factors and Russia’s invasion of Ukraine. This led to major policy changes in the global economy and as a result, the majority of the global population shifted from wheat to import and consumption of rice amid wheat shortages. Correspondingly, shortage of rice emerged and this forced different nations around the world, including India to restrict and ban certain varieties of rice.
The major policy changes witnessed and the suffering from the global shortages have prepped major producers of the commodity like India, Bangladesh, Vietnam, etc. to prepare better for the future by increasing procurement costs to encourage farmers to increase acreage.
High procurement costs provided by the government and the high global demand for rice had encouraged the farmers to increase their production but, has led to a shortage of rice with the rice traders and Rice Suppliers and have ultimately raised the prices of Indian rice.
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