19-9-2023 (BANGKOK) Ladda Prachada, a 63-year-old food seller, has found herself in a tough spot lately. Her roadside eatery on Thonglor road in the Thai capital has been closed three times in the past week, primarily due to soaring grocery costs, with rice prices being a significant contributor.
For years, a 48kg sack of jasmine rice, a staple in Thai cuisine, cost her $31. But since India restricted its rice exports, the price has skyrocketed by 30% to $40 per sack.
With dwindling business and rising overheads, including rent, groceries, and four employees, Ladda has been left with little choice but to scale back her operations. She explains, “The price has gone up by a lot, about 300 baht per sack. It’s expensive. I don’t really get any profit. That’s why I often close my eatery. I’m just fed up.”
Ladda is just one of many consumers and business owners in Thailand who are feeling the financial strain of rising rice prices and global shortages, exacerbated by India’s decision in July to ban rice exports to address domestic food inflation.
While this situation presents an opportunity for major rice producers and exporters in Southeast Asia, such as Thailand and Vietnam, to regain market share and reap significant profits, market experts caution that regional consumers will bear the brunt of price increases. Moreover, climate change poses a threat to crop yields and food security in the region, adding to the unpredictability.
India, the world’s largest rice exporter, supplied 22 million tonnes of rice globally in 2022, accounting for 40% of the world’s total rice exports. However, this year, domestic food inflation prompted the Indian government to halt non-basmati white rice exports, representing a quarter of its total rice exports.
This export restriction, coupled with India’s existing limits on broken rice exports, has tightened global rice supplies, driving rice prices to their highest levels in 15 years, according to the UN Food and Agriculture Organisation (FAO).
Experts suggest that Thailand and Vietnam are the primary beneficiaries of this situation. A tonne of high-quality white rice from Thailand increased in value from about $520 in mid-July to $637 by the end of August, while Vietnam experienced a similar trend, with its white rice fetching $647 per tonne in the same period.
Both countries have seen their rice export volumes in the first eight months of the year rise compared to the same period the previous year: Thailand by 12% and Vietnam by 20%. Indonesia and the Philippines were among the top importers of Thai and Vietnamese rice, respectively.
Vietnam and the Philippines are finalizing a five-year agreement on rice supply, aiming to stabilize rice supplies in the Philippines, where rice is a dietary staple.
The global rice shortage worsened when Myanmar announced limits on its rice exports until mid-October to control domestic prices.
While traders in Thailand anticipate shipping at least 8 million tonnes of rice overseas by the end of the year, Vietnam aims to export 7.5 million tonnes, up from 7.2 million tonnes the previous year. However, Thai suppliers are currently holding onto stocks as they await further clarity from India, which still permits certain rice exports for food security needs.
The uncertainty surrounding India’s rice exports has led to speculation among traders, making it challenging to determine accurate reference prices for rice.
Climate change presents a significant threat to rice producers in Southeast Asia. Irregular weather patterns, particularly in India, pose a risk to rice yields, and without adaptation measures, rain-fed rice yield in India could drop by 20% in 2050 and 47% in 2080.
Southeast Asia is also vulnerable to climate change’s impact on food security, with climate variability likely affecting rice yields over the long term. The atmospheric phenomenon known as El Nino, which is expected to bring elevated temperatures and extreme weather, further compounds these challenges.
In response to these challenges, Southeast Asian countries are implementing measures to prevent hoarding and control rice prices. For instance, the Philippines has imposed price ceilings on rice nationwide and conducts regular warehouse inspections. Malaysia has imposed buying limits on rice to control retail purchases.
The future of Thai rice may not be as promising as many believe. A study by the University of the Thai Chamber of Commerce revealed that the yield per rai (0.16 hectares) of Thai rice has shrunk over the past decade. In 2012, Thai fields produced an average of 463kg of rice per rai, but that number fell to 445kg in 2022. In comparison, key competitors like India and Vietnam produced significantly higher yields per rai in the same period.
To ensure food security and competitiveness, industry players are calling for increased investment in agricultural research and development and long-term planning for the staple food.
While climate volatility and rising rice prices present challenges, innovations in farming practices and supply chain improvements can help reduce losses. On-farm technologies and best practices, along with strategic steps in the supply chain, can enhance rice production and reduce post-harvest losses.
Research centres in Thailand are also developing rice varieties that can withstand climate challenges. The National Center for Genetic Engineering and Biotechnology (BIOTEC), for example, is working on rice varieties that can survive flash floods and thrive with limited water supply.
Efforts like these are crucial to address the challenges posed by climate change and ensure food security in Southeast Asia’s rice-producing countries.
