The biggest victim of the current global crisis has been food grains. The Ukraine conflict, India’s rice export ban, and the El Nino weather pattern will have a severe impact on global food prices and disrupt supplies.
India has banned non-basmati white rice exports to curb domestic inflation, raising fears of a further increase in food prices. At the same time, Russia has called off the Black Sea grain deal after an attack on a bridge linking annexed Crimea, sending prices of wheat and corn climbing.
India is the world’s largest rice exporter, accounting for more than 40% of global shipments. Its best known variety – non-basmati white rice – accounts for 25% of exports. The international sales of Indian rice have soared 35% during the year, leading to a 3% rise in domestic price in June alone which was worsened by a 20% duty on exports and damages during monsoon rains.
The Indian government prompted into action by banning exports to ensure domestic supply, knowing well that elections will be held next year and soaring food prices could rise further. Last year, India banned wheat exports and the ban still stands. India’s latest move sent the price from several countries in Central Asia and next two largest exporters, Thailand and Vietnam, rising on global markets.
Global food prices have also been hit by Russia’s war in Ukraine, which has driven up grain prices around the world. Russia’s decision to withdraw from the UN-brokered Black Sea grain initiative, which guaranteed safe passage for vessels from Ukraine, has prompted fresh concerns about the global food crisis and could stoke inflation. Russia threatened that any ship leaving a Ukrainian port is a legitimate military target, raising fears of further disruption.
Rice is a staple for more than 3 billion people, and nearly 90% of the crop is produced in Asia, where the El Nino weather pattern usually brings lower rainfall. Europe and the United States have been hit by unusually hot weather and lack of rain, leading to a reduction in wheat harvests this year. These factors will be painful for buyers already hit by high inflation and soaring food prices. Countries dependent on food imports will as always remain the worst affected.
