GLOBAL rice prices may remain elevated, which is bad new for importing countries such as South Africa.
This is unless the existing market instabilities in the global market abate and the drought fears from India do not severely impact rice production, according to Thabile Nkunjana, an agricultural economist at National Agricultural Marketing Council (Namc).
He said India has banned broken rice exports and imposed a 20% tax on both white and brown rice.
"Following a prolonged drought that led India to limit wheat exports in May of this year, this decision was made as a result of irregular rain from key rice-producing regions.
This is very unfortunate for the world at this time. The global food price index decreased for a fifth consecutive month in July, indicating a decrease in global food inflation. However, this move by India may trigger high food prices again," Nkunjana said.
The agricultural economist said the previous Indian rice-marketing season was exceptional, and its exports greatly increased, supporting the global supply and lowering prices.
Namc’s price monitoring reports demonstrated this, which showed that while other goods continued to be priced significantly higher, rice prices continued to be below the levels seen last year.
India exported 21.1 million tons of rice last year and accounted for at least 40% of the total amount exported globally. It was followed in exports by Thailand (6.1 million tons), Pakistan (4.0 million tons), the United States (3.4 million tons), China (2.5 million tons), and Myanmar (1.7 million tons) as the leading global rice exporters.
Since 2017, India and Thailand have been supplying 90% of South Africa's annual consumption of one million tons of rice. Other sources of rice for South Africa included Pakistan, Brazil, and Vietnam, however each only contributed 1% or insignificant quantities of the country's yearly imports.
While broken rice was typically used to manufacture animal feed on a global scale, South Africa and other African countries also used it for human consumption. Over the past five years, India has contributed 48% of the at least 59 000 tons of broken rice that South Africa has imported annually on average.
With regards to India’s ban for broken rice exports, Nkunjana said South Africa should not be very concerned because only 2% of the country's overall rice imports were broken rice. "However, the 20% tax imposed on white and brown rice exports is a cause for concern for the coming months and the upcoming season for importing countries, especially for South Africa for various reasons."
About 70% of South Africa's annual imports of one million tons of rice have come from Thailand over the past five years. Nkunjana said the quota imposed on rice and a ban on broken rice was likely to push Thailand prices and other rice exporters up. India was South Africa's second-largest rice supplier. This had a potential to create uncertainty for South Africa hence there was a need to further diversify import quantities.
"Given this and the current global grain market concerns, it will be important to make thorough preparations for South Africa because rice is the third most consumed food after maize and wheat," he said.
Pakistan, which is now suffering from floods and was the third-largest exporter of rice for South Africa and the world, has lost roughly 45% of its cropland in parts of Sindh province and Punjab, another prominent rice producer is also reportedly affected.
"These developments are likely to keep rice prices elevated," Nkunjana said.
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