Located in Asia, India is the largest rice exporter in the world. The Asian nation exports rice to over 150 countries around the world and such is the influence that India commands a mammoth 40% share in the total global rice trade. Different varieties of Indian rice enjoy a strong demand worldwide and any disruptions in the supply of Indian rice most likely lead to a rise in prices of rice in the global market, thereby raising troubles for countries dependent upon India for meeting their domestic rice needs.
Owing to this, market speculations of India bracing El Nino this year have led to an increase in demand for Indian rice across different global markets and this has been the reason behind the rise in prices of Indian rice in global markets.
Strong Demand For Indian Rice In Global Markets
The Indian Meteorological Department (IMD) has forecasted that India-the second largest rice producer is going to witness the El Nino effect during the second part of the monsoon, starting from August and this has led to a surge in demand for Indian rice on the global front.
The last time, India braced El Nino was way back in 2007 and 2008. Back then, the crisis was such that India banned rice exports, and this led to a rise in the prices of rice. Following India’s rice ban, rice prices touched $1000 in the global markets, making it unaffordable for poor nations. To avoid such a crisis this time around, there has been an increase in global demand for Indian rice. Mr. BV Krishna Rao, President of The Rice Exporters Association of India (TREA) said that an increase in demand from countries like Indonesia, the Philippines, and Malaysia has been fueling up prices of Indian rice.
FCI’s Food Procurement Also Behind Rise In Indian Rice Prices
Fears of a harsh El Nino effect coupled with the Food Corporation of India’s rice procurement have combinedly led to a rise in prices of Indian rice. While IMD’s forecasts of El Nino have led to an increase in demand from Asian nations like Indonesia, the Philippines, and Malaysia, FCI’s rice procurement is lowering the volume of stocks for rice exporters to export.
The state agency, Food Corporation of India (FCI) is procuring rice to distribute through ration shops and to meet any food emergency, and at a time when India is witnessing a high global demand, less availability of rice for exports is also pushing prices.
The Bottom Line
Different varieties of Indian rice remain in high demand all year round and this time as well, acting on IMD’s forecast that India is going to brace a harsh El Nino effect, countries like Indonesia, the Philippines, and Malaysia are showing high demand for Indian rice which is fueling up Indian rice prices in the global markets.
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