As a result of India’s ban on rice exports, global fears about rice supplies have grown, and rice prices have risen, according to Thabile Nkunjana, senior economist at the National Agricultural Marketing Council (NAMC).
In July, India imposed an export ban with immediate effect on non-basmati white rice. The country cited rising domestic prices and fears of a shortfall in the next crop yield due to El Niño and other global issues such as the Russia-Ukraine war, which have destabilised the world economy.
India is the world’s leading rice exporter, accounting for about 41% of worldwide exports, followed by Thailand (13%), Vietnam (13%), Pakistan (8%), and the US (5%).
Nkunjana said the move has raised fears of destabilising rice supplies in certain parts of the world and reportedly sent some US shoppers into panic-buying mode.
“Following India’s embargo on non-basmati rice exports in July 2023, global rice export prices have risen to levels seen in 2008. The International Grain Council’s global rice index was 42% higher year on year on August 16, 2023,” said Nkunjana.
He said the rice embargo meant that countries needed to look for other alternative rice suppliers to fill in the gap left by rice imports from India. Countries experienced this in the instance of wheat when Russia invaded Ukraine in February 2022, as they had to replace Black Sea wheat supplies at a higher cost.
“As a result of India’s ban on rice exports, global fears about rice supplies have grown, and rice prices have risen. These developments are worrying, especially for countries that consume rice in relatively large quantities while being unable to produce it domestically, such as South Africa, its neighbours, and many African and Asian countries,” said Nkunjana.
He said export prices for a ton of 100-grade B white rice from Thailand have increased by 23% from $520 on July 17 to $640 on August 16. This could worsen should other key rice exporting countries restrict exports, as was the case in most of 2022.
“So far, only the United Arab Emirates, which relies on Indian rice supplies for its domestic rice consumption and re-exports, has been reported to have temporarily banned rice exports for four months as of July 28, 2023. But the temporary ban by the United Arab Emirates should not be much of a concern for South Africa but for countries that rely on it for their rice imports,” said Nkunjana.
He said domestically, rice retail prices remain marginally lower at this stage: 2kg of rice nationwide was 1.3% lower year on year at the end of June 2023, 1.6% lower when compared to June 2021, and 8.4% lower when compared to June 2020.
“This generally means that for now, the rise in global prices has not yet reflected into local prices across South Africa. Retail prices for a 2kg bag of rice are currently at R39, and the next CPI data to be realised by Statistics South Africa on August 23 for July 2023 will show how things are progressing,” he said.
The biggest retail group in South Africa, Shoprite, did not want to divulge much on the extent to which the ban has affected their rice sales and whether customers could expect an increase in rice prices at their stores.
Meanwhile, Tiger Brands said rice prices had increased per ton, affected by sentiment around the ban on the export of white rice and broken rice by India, as well as volatility in the rand exchange rate.
“In the short term we do not foresee any shortages in supply, but price inflation will be a reality.”
The company said KwaZulu-Natal represented a significant portion of the South African rice market.
“In addition to its Tastic rice products, Tiger Brands also packages and distributes Aunt Caroline rice in KZN.”
The SPAR Group’s national merchandise executive, Robert Brink, said the world rice situation had had minimal impact.
“Up to now, there has not been any shift in demand for alternate starches,” he said.