of inflationary threat to historical price collapse
For months, the world feared a reissue of The 2007-08 food crisisWhen the rice exceeded $ 1,000 per ton and caused disturbances from Haiti to Bangladesh. At the beginning of 2024, Thai rice for 5% – referring in Asia— ton $ 650 per tonits maximum in ten years, promoted by the child, protectionism and panic purchases. And yet, in August of this year the opposite has happened: the international price slid towards minimums, driven by historical crops and yields that do not stop improving. It is the silent victory of productivity: more rice with almost the same land. International prices in free fall. In recent months, rice has been drastically cheaper. According to Financial Times5% Thai party white rice is negotiated at $ 372.5 per ton, its lowest level in eight years, after a 26% decrease since the end of last year. The United Nations Food and Agriculture Organization (FAO) Confirm the trend: Its global rice price index (FARPI) was reduced by 13% so far this year, and in July another 1.8% monthly fell, standing 22% below the previous year. Abundant supply, absent demand. In an extensive report by the Financial Times They have pointed out That, on the side of the offer, India – the largest exporter – in September last year the restrictions on external sales, while reached the market with a record harvest in 2023/24 and public stocks that reached 60 million tons in May, up to 15 million more than the average of recent years. Part of those surpluses even went to ethanol to release space before the new campaign. In addition, good campaigns were added in Thailand and Vietnam, which brought world production to a record level. On the side of the demand, Indonesia advanced purchases last year and withdrew from the market, while the Philippines forbade imports until October to protect its main harvest. “It’s that simple: there are no buyers,” summarized Samarndu Mohanty, director of the Center for Studies of Agriculture and Sustainable Development of the State Agricultural University of Telangana, cited by FT. The result is easy to define: there are plenty of stocks and lack of buyers, and, therefore, prices collapse. An exception: Japan. While global prices collapse, Japan suffers the opposite scenario. According to Bloombergthe country lives an extreme heat summer and drought in key producing regions such as Tohoku and Hokuriku. Kazunuki Ohizumi, Professor Emeritus at the University of Miyagi, has anticipated the environment: “Ris -of yields and distribution volumes will almost certainly fall.” To contain the crisis, the Japanese government released hundreds of thousands of tons of reserves and allowed to expand the culture surface. However, the measures were insufficient. In May of this year, As my partner has pointed out for XatakaJapan took an unprecedented step in 25 years: import rice from South Korea. Shortly after, the Aeon chain announced the sale of American rice Calrose, 10% cheaper than El Nacional. Social and political pressure has been enormous: surveys show a collapse in the approval of Prime Minister Shigeru Ihiba, and the controversy was fueled after unfortunate statements of the Minister of Agriculture. In addition, the Japanese country maintains a strict protectionist policy: only 770,000 tons annually enter tariff, and outside that fee the rate amounts to 341 yen/kg (about 2.30 dollars). Even in a context of world abundance, its consumers paid up to 50% more than a year earlier, According to Bloomberg. The productivity lever. The global price collapse has a historical background. According to Javier Blas in his column for Bloombergrice yields have gone from 2.4 t/ha in 1975 to about 4.7 t/ha in 2025, thanks to the massive use of fertilizers, pesticides, irrigation and improved seeds. The global rice surface has barely varied since the 80s, but the production has doubled, until reaching an expected record harvest of 541 million tons in 2025/26, According to FAO. The “monsoon proof” resilience. In particular, India has become an example of resilience. As Financial Times explained, The country has almost universal irrigation systems in the main rice regions, guaranteed minimum prices and state bonuses that protect farmers. This allows you to hold record crops even with erratic monsoons. The minimum guaranteed prices (MSP) and state bonuses ensure a mattress against international volatility. In addition, farmers buy new seeds every season, which increases yields and expands the surface. In this way, the result has been a leftover offer that New Delhi channels both the domestic and international market, and even industrial uses such as ethanol. Winners and losers. For consumers and importing countries, decrease is good news: less inflationary pressure in the basic basket. For producers, especially in Asia, it is the opposite: with increasingly expensive supplies and depressed international prices, margins narrow dangerously. Rice also becomes a stability factor or political instability. Blas Remember that in Asiawhere rice is central in the diet, a price rebound can overthrow governments. Japan is now experiencing it: the internal basis has tensioned to the administration of ISHIBA. What to wait for the future? The base scenario indicates that prices will remain weak. Analysts consulted by the Financial Times They foresee a possible additional drop of 10% if shocks do not occur as a new extreme climate episode or commercial restrictions. Blas in your column Calculate that world rice production of 2025-26 will be the largest in history, which will maintain the bearish pressure. But Japan remembers that climate change can decoupling internal markets from the global trend: a summer too hot is enough to transform world abundance into a domestic crisis. The grain that measures stability. Rice is, perhaps like no other food, the measure of our ability to feed the world. Today their prices sink because humanity has learned to produce more with less land, not because the weather has given a permanent truce. For millions of families, that means a more affordable table; For millions of farmers, the threat of an income in fall. The challenge is clear: to extend the benefits of productivity without leaving behind … Read more
