The world may be headed for its first tight rice supply since the spike in global food prices nearly a decade ago, says a social scientist at the International Rice Research Institute, part of a network of agricultural research centers. Social scientist Samarendu Mohanty told news site SciDev.Net that a draw-down of rice stockpiles and smaller crops in some rice-growing nations could cause “a repeat of the rice price crisis in 2007-08 … If we have a bad monsoon at the tail-end of El Niño, with drought still persisting in many parts of Asia, the risk significantly increases in terms of price response.”
Says SciDev.Net: “Mohanty urges that joint action is needed among countries, especially the ASEAN+3 and India, in recognition of shared responsibility as well as shared investments and a regional trade outlook. The ASEAN+3 includes the ten ASEAN member countries plus China, Japan and South Korea.”
Mohanty’s comments about the supply risk were similar to an essay published in an IRRI magazine in March, when he said there was reason for concern about the direction of the rice market in the second half of this year. India, one of the two largest exporters, has less rice to sell because of a crop downturn in 2015 while the stockpile in Thailand, the other top exporter, is shrinking rapidly, he said. At the same time, leading importers Indonesia and the Philippines “have been aggressively procuring rice from the international market” because of doubts about their domestic supplies.
“It will be an interesting few months for the global market, which faces a tight supply situation for the first time since 2007-08,” wrote Mohanty. With a normal-sized wet-season crop, rice prices will be stable into 2017. A poor crop could set off repercussions among rice-importing nations: “If they panic similar to 2007-08 and resort to excessive buying and export restrictions, then another price spike is in the offing. However, if they keep their cool and remain rational regarding their needs, the market price may still go up, but up only to a level that is consistent with market fundamentals.”
The International Grains Council forecasts global rice inventories will drop 11 percent “on steep declines in key exporters” before this year’s rice crop is harvested worldwide. “Centered on a recovery in Asia, including in India, the 2016/17 world rice [crop] is projected at an all-time peak of 485 million tonnes, up by 3 percent year-on-year,” said IGC’s Grain Market Report. “However, due to smaller carry-ins and continued growth in food use, stocks are anticipated to tight to an eight-year low of 94 million tonnes.”