Price surge in Rice is anticipated as EL Nino risks intensify
A warning regarding the potential negative impact of the El Nino weather event on the agricultural sector in South Asia, including India and Australia, has been issued by Food and Agriculture Organization (FAO). Specifically, corn, soybean, and rice production are expected to be negatively impacted by this weather phenomenon.
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The FAO's agriculture and market information system (AMIS) has explained that predicting the effects of El Nino is a challenging task since each event varies in terms of strength, duration, and localized mitigation. Historical data shows that some crops and regions are more susceptible to damage than others.
Rice production across Southeast Asia, including India, is expected to suffer the most from this weather event. The Indonesian government has already agreed to import 1 million tonnes of rice from India to ensure an adequate supply of the staple food amid an increased risk of poor harvests this year. It is crucial to mention that India is the cheapest supplier of rice globally and accounts for 40% of the world's rice exports. Therefore, any disruption to its agricultural sector can have significant implications for global food prices.
The price of Indian rice exports has already risen to a five-year high, with a 9 percent jump following a 7 percent increase in the price the government paid farmers for new-season common rice last month. The importance of rice as a staple food for over 3 billion people worldwide underscores the significance of this issue.
Furthermore, almost 90% of the water-intensive crop is produced in Asia, where the El Nino weather pattern typically results in lower rainfall. It is worth noting that the global rice price index of the FAO is already above an 11-year high, even before the weather phenomenon can disrupt production.
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According to Procurement Resource, El Nino weather events can cause unpredictable weather conditions that will have a significant impact on rice production. While South Asia will be hit the hardest, the global rice price index will also be affected. This means that the prices of rice will increase as the El Nino weather conditions get stronger.
