India wants to pull the emergency brake: Why is rice becoming more and more expensive?

India wants to pull the emergency brake
Why is rice getting more and more expensive?

El Niño returns. The weather phenomenon, intensified by climate change, could result in the hottest year since weather records began. The first consequences can already be felt.

Global rice prices are at their highest in more than a decade – and it looks set to rise further. According to the financial news agency “Bloomberg”, India, the world’s most important rice supplier, is considering drastically restricting exports. Accordingly, the export of most types of rice should be banned – with the exception of the expensive Basmati rice. A ban would affect around 80 percent of all Indian rice exports.

The background: Rice prices have been rising worldwide for months – including in India with its 1.4 billion inhabitants. Since the beginning of the year, rice has risen by an average of 8 percent nationwide, and in the 30-million city of Delhi it was even 15 percent. That fuels all inflation. In June it had climbed for the first time since January and was approaching the five percent mark – mainly due to higher food prices. According to economists interviewed by the Reuters news agency, this trend is likely to continue in the coming months.

This is not good news for the government. High food prices could cost them votes. Elections will be held in several states this year, and parliamentary elections will be held next spring. With the export restriction, the government of Prime Minister Narendra Modi wants to increase the rice supply in India and thus ensure falling prices on the home market. In order to combat food inflation, the prime minister has reacted in a similar way several times recently. Last year, for example, the government temporarily banned the export of wheat and restricted the export of rice and sugar.

However, the main reason for the rising prices for rice worldwide is not an impending freeze on India’s exports, but the return of El Niño. In Asia – where 90 percent of the water-intensive grain is grown – the weather phenomenon usually ensures less precipitation and thus poorer harvests.

Important Food

El Niño occurs on average every two to seven years, lasts nine to twelve months and causes extreme weather. Climate change exacerbates this phenomenon. The World Meteorological Organization assumes that El Niño will be particularly violent this time and will lead to the world’s hottest year on record. Average temperatures around the world are now reaching record highs.

The prospect of lower harvests is now driving up the price of rice, among other things. Because a drought is looming, farmers in Asia are already growing significantly less rice for the next harvest, despite the prospect of higher prices. In India, where the second harvest will be brought in in November, according to Reuters, 26 percent less rice has been planted for summer sowing than a year ago – this is also driving up prices.

This is a problem mainly because rice is a staple food for around three billion people, around half of the world’s population. India exported almost 56 million tons of rice last year, which was 40 percent of global exports. African countries, including Senegal and the Ivory Coast, are among the largest buyers.

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