The price of rice has hit seven-year highs, while wheat futures have risen by around 15 percent since the second half of March. The International Grain Council expects a sharp upturn in near-term demand for rice and wheat-based foods.
According to the Thai Rice Exporters Association, the price of five percent broken white rice (the industry benchmark) rose 12 percent between March 25 and April 1. Rice prices are now the highest since late April 2013, Reuters data showed.
“Supply is currently tightening due to the impact of the Covid-19 (coronavirus) pandemic on demand and trade, as well as to the aftermath of bad weather in key producers (severe drought in South East Asia and Australia),” said Fitch Solutions.
Rice prices had started climbing in late 2019 due to a severe drought in Thailand and strong demand from Asian and African importers. Thailand is the world’s second-largest exporter after India, one place ahead of Vietnam.
In India, rice traders have now stopped signing new export contracts as labor shortages and logistical disruptions have been hampering the delivery of existing contracts.
“Unlike other sectors, agriculture is heavily affected by the timing of the lockdown, rather than the duration, because of the strict planting and harvesting calendar,” said Samarendu Mohanty, Asia regional director at the Peru-based International Potato Center (a non-profit group researching food security).
He explained to CNBC that North America, Europe and China are now facing labor shortages and supply line disruptions for spring planting and “if the planting season is missed, there will be no crop for the season or for the entire year.”
Food industry associations and organizations are urging countries to keep trade open. According to Mohanty: “One cannot blame countries for ensuring their domestic food security during this trying time, but countries need to be extra careful in taking unnecessary policy measures that could create panic in the market.”