Global rice prices are at an 11-year high and rising, much to the dismay of the 3.5 billion people who rely on the staple as a primary nutrient.
What’s happening?
As always, there are several factors at work here, but two stand out:
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- 🌾 Declining yields
After six years of slow but steady growth, total output is projected to decline this year. This is mostly due to shifting weather patterns across Asia, home to 90% of global rice production.
In particular, it seems the warmer El Niño phenomenon is on its way.
- 💸 Increased government support in India
Ahead of next year’s elections, India has increased the price it pays its rice farmers by 7%. And being home to almost half of world rice exports, India’s price rise has quickly spilled into global markets.
Plus of course, this is all exacerbated by tight global food and fertiliser markets following Russia’s invasion of Ukraine.
Intrigue’s take: If you’ve been reading Intrigue for a while… thanks!
But also, you might’ve noticed a pattern: as prices rise, governments face pressure to curb key exports, whether it’s Indian ‘broken’ rice, Malaysian chicken, Australian LNG, or Indonesian palm oil.
The items and locations change, but the underlying drivers stay the same: sensing volatility, governments are pulling up the drawbridge. Yet history suggests this can often just beget more volatility.
Also worth noting:
- Rice is highly susceptible to changes in the climate, with most rice cultivated in regions close to its optimal temperature range.
- Global pasta prices are also on the rise, to the extent that Italian consumer groups are calling for a boycott.
