India's export ban and looming El Niño pose major threat to global rice stocks

INDIA's decision to ban rice exports and the looming El Niño have resulted in panic buying in the west and price increase may push poorer countries towards hunger, reports said.

Buyers from Africa to Asia are likely to scramble for rice shipments as supplies tighten in coming months following India's action last week to ban non-basmati white rice exports.

India is the biggest exporter of rice, accounting for 40 per cent of the global market, some 15 per cent of supplies come from Thailand and 14 per cent from Vietnam.

Asian-Americans have already started storing rice fearing shortage and price hike of the Asian staple.The price of a 20-pound bag has more than tripled in parts of the US – forcing shops to introduce limits on purchases, The Telegraph reported.

People are also swapping loo rolls for rice. Panic buying also started in Canada and Australia.

One Twitter user in the US shared a video in which people were seen scrambling and elbowing each other for rice bags and wrote: “I came to know from workers in Indian groceries, Costco has stocks but they [are] afraid of Indians climbing racks to snatching #rice bags, may fell over other customers and get hurt. This is very shameful. Below is from Indian groceries.”

“I visited almost 10 plus stores. I started looking for a bag of Sona Massori [a variety of rice] at 9am and it wasn’t until 4.00pm that I could finally lay my hands on a bag of rice at triple its usual price,” Indian-American Aruna from Washington was quoted as saying by ANI.

Tarun Sardana of Sapna Foods, a wholesale seller in Maryland, said, "We have been getting a lot of extra calls for specific rice - the Sona Massori. The demand on the weekend was even more. By Monday morning, everybody was just trying to source as much South Indian rice as possible from warehouses such as ours."

In his opinion, consumers are buying it up in bulk as a precautionary measure.

Traders and analysts said that India's export ban will cut availability of rice on world markets by about a fifth, and could lead to importers seeking more government-to-government deals to overcome shortages and tame spiralling prices.

The emerging El Niño phenomenon, which occurs every three to seven years, is an unusual warming of the eastern Pacific Ocean which affects seasonal weather across the globe. Experts believe that it may further destabilise an already fragile food market.

“The full impact on agriculture yield is dependent on the severity of the El Nino event. But the challenge is that it is coming on top of other other climate and geopolitical events that are already causing production losses and supply disruptions … so all in all, it’s a concerning situation," said Elyssa Ludher, from the Climate Change in Southeast Asia programme at the ISEAS–Yusof Ishak Institute, a Singapore-based think tank.

“Past studies have shown that a very strong El Niño could see repercussions for years, depending on how extensively it hits."

Nese Sreenivasulu, an expert at the International Rice Research Institute (IRRI) in the Philippines, told the newspaper, “Asia really is the global rice bowl, it’s central when it comes to rice-based food security. If we are not able to manage both productivity and quality in the face of climate threats, such as the El Niño, it will create issues for food security worldwide.”

Countries are actively responding to mitigate the consequences, as importers like China and the Philippines are taking measures to accumulate reserves. In Thailand, officials are advising farmers to shift towards cultivating drought-resistant crops instead of a second rice crop this year, to preserve water.

Similarly, in Indonesia, farmers are attempting early planting, in the hope that the rice will mature before El Niño hits.

Last September, India banned exports of broken rice in a bid to cool domestic prices, but since then official data shows the country approved sales of around one million metric tons of broken rice to Indonesia, Senegal, Gambia, Mali and Ethiopia.

African buyers are likely to approach the Indian government for rice sales, and Asian importers such as Indonesia and the Philippines could sign government-to-government contracts with the region's top exporters Thailand and Vietnam, traders said.

Indonesia has signed an agreement with the Indian government to potentially import one million metric tons of rice if the El Nino weather pattern hits its domestic supplies.

“Rice has been called the political crop, namely because government intervention in the global food market is pervasive,” said Shirley Mustafa, an economist in the FAO’s trade and market division.

“It’s not a foregone conclusion that production will decline with the El Niño… [but] government intervention in preparation for it, or for other factors, can have significant impacts on the supply side and affordability.”

(with inputs from Reuters and ANI)