Given India's significance in the global rice trade, if the country proceeded with its muted export ban, this would be felt by all in a potential upswing in global rice prices, Agricultural Business Chamber chief economist Wandile Sihlobo said yesterday.
He said this would also disrupt the declining trend of the global food prices recently observing through the FAO's Global Food Price Index.
"The major drivers of the decline in the FAO's Global Food Price Index in the past few months were sugar, vegetable oils, cereals and dairy products. Rice is a major component of grains. Therefore, a change in its price will cause a meaningful difference in this softening price trend. Thus, this is a matter worth monitoring over the next few days and weeks," Sihlobo said.
Agbiz said South Africa was one of the importing countries, the world's eleventh largest rice importer, with a typical import volume of about a million tons a calendar year. The International Grains Council (IGC) forecasts South Africa's rice imports at 1.1 million this year and similar volume for the next year.
He said roughly 90% of the imported rice was for the domestic market and the balance was typically exported to neighbouring countries. Thailand was the leading rice supplier to South Africa, accounting, on average, for 74% of South Africa's rice import volume a year in the past five years. India is the second largest rice supplier to South Africa, boasting an average annual share of 21% over the past five years. Other rice suppliers to South Africa include Pakistan, Vietnam, China, Australia, the US, and Brazil.
“If India proceeds with this much-talked-about temporary rice export ban, South Africa would have to source larger volumes of its rice from other suppliers," he said.
Sihlobo said the rationale cited in various media articles was that India's government was worried about inflation ahead of the upcoming elections.
However, the problem with this view was that India faced far less inflation pressure than other regions. "For example, in June 2023, India's annual consumer inflation was at 4.8%, down significantly from the start of the year when inflation was at 6.5% in January 2023. Food inflation has moderated at roughly the same pace, measured at 4.5% in June 2023, down from 5.9% in January."
India is a significant producer of rice globally, accounting for a 26% share in the expected 2023/24 global rice production of 525 million tons, according to data from the IGC. Of the 50 million tons of rice for global exports projected for the 2023/24 season, India was expected to account for about 40%.
Sihlobo said this meant that if the Indian government proceeded with a temporary ban on rice exports, as the recent reports suggest, there could be major disruptions in global rice trade and upside pressure on prices.
Agbiz said that it was also worth noting that the potential ban on India's rice exports also came in a season of abundance where such policy action was unexpected. For example, the IGC forecasts 2023/24 global rice production at a new peak of 525 million tons, up by 2% year-on-year.
The global rice stocks were expected to remain solid at 171 million tons, roughly unchanged from the previous 2022/23 season. In the absence of trade frictions, such production figures should signal a broadly sideways move in global rice prices, he said.
BUSINESS REPORT