GLOBAL- Despite the recent exponential rise in rice prices globally, a recurrence of the 2008 crisis scenario remains unlikely, according to the International Rice Statistics Observatory’s (Osiriz) latest report. 

During the last several months, the rice market has been shaken up by restrictions on trade from India, the rice export leader. 

However, despite concerns about the rice market by different observers, the risks of a repeat of the 2008 crisis are low. 

During that crisis, export restrictions by key rice exporting countries, India and Vietnam, combined with the panic buying of major rice importing countries, such as the Philippines, jacked up world rice prices by 117%-149% in the first quarter of 2008. 

The effect of these phenomena was devastating as close to a billion people were plunged into poverty.

However, last July, the FAO rice price index rose 2.8% to reach 129.7 points, 20% more than a year earlier and the highest level since September 2011. 

This increase comes against a backdrop of growing demand and export restrictions from India, which has banned exports of broken rice and imposed a 20% export tax on certain non-basmati varieties, in order to ‘mitigate the rise in prices on the domestic market.    

According to Osiriz, while this situation is already raising fears about world trade in the coming months, the world currently has comfortable rice stocks. 

Closing stocks for 2022 reached 197 million tonnes compared to 195 million tonnes a year earlier, representing more than 38% of overall needs and above the five-year average.

Compared to 2008, Osiriz indicates that global rice stocks are 150% higher if Chinese stocks are excluded. Furthermore, indicates the report, Thailand and Vietnam, respectively 2nd, and 3rd world exporters, anticipate an increase in their exports in 2023. 

Such a scenario could make it possible to fill part of India’s limitations in addition to the fact that Pakistan, the world’s 4th exporter, should also improve its production and sales in 2023 after the year 2022 was marked by serious floods.

More generally, Osiriz believes that India could, despite trade barriers, relax restrictive measures towards countries that rely heavily on its cereal for the sake of food security.

The extent of the current crisis will depend on the posture in the coming weeks of exporting and importing countries. Once the first preventive reactions have passed, perhaps they will remember that crises in the rice market rarely last long and that price adjustments (downwards) can be just as brutal. However, it is likely that export prices will remain firm over the coming weeks until the gradual arrival of the main harvests in Asia from the last quarter of 2023 ,” the report concludes.

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