Many of you probably heard that India’s government announced an export ban last week on non-basmati white rice. As a result, shipments from the world’s largest exporter of that type of rice may reduce the global supply by 40-50%. Rice is a staple food for more than three billion people worldwide, and demand has risen sharply. The top five importers of India’s white rice are Thailand, Italy, Spain, Sri Lanka, and the U.S.A. The top ten rice exporting countries are India, Thailand, Vietnam, Pakistan, Myanmar, China, the U.S.A., Cambodia, Brazil, and Uruguay.

 

 

India’s sudden policy shift will accelerate inflation for the commodity following an 11.5% YoY increase. Prices hitting decade-highs is detrimental to global food security, will hasten a supply shortage amid a global production deficit, and has encouraged hoarding by consumers and nation states because we are all preppers now. Prior to the export ban, rice production in 2023 had the largest deficit in two decades. The situation is so dire that the IMF pleaded with India to reconsider the ban over fears that global prices will skyrocket.

Global rice shortage is set to be the biggest in 20 years… “From China to the U.S. to the European Union, rice production is falling and driving up prices for more than 3.5 billion people across the globe, particularly in Asia-Pacific – which consumers 90% of the world’s rice… Rice prices are expected to remain around current highs until 2024, stated a report by Fitch Solutions Country Risk & Industry Research dated April 4… The global shortfall for 2022/2023 will come in at 8.7 million tonnes.” – CNBC, Apr. 18

India’s ban on rice sales due to surging domestic prices – Sky News, Jul. 21

 

‘Only 1 rice bag per family’ notices (rationing), empty shelves mark US stores after India curbs export… “Following the panic buying of rice from departmental stores in the US after India announced a ban on the export of non-basmati rice, several stores in the country have put a limit on the number of rice bags customers can buy. Many customers also reported empty shelves at the stores when they visited to buy rice.” – Money Control, Jul. 25

 

White rice shortages reported in stores across Texas… “‘They really wanted to purchase 10, 12, 15 bags,’ said Anand Pabari, president of India Bazaar, a South Asian grocery chain with stores across Texas. ‘It was a really crazy situation.’ Wholesalers have had to raise their prices due to increased demand, local stores are getting an influx of calls asking if they have white rice, and the online websites of major retailers in multiple cities across Texas show white rice is currently out of stock.” – Chron, Jul. 27

Export ban prompts hoarding, countries will run out – Global News, Jul. 27

 

 

A global supply deficit of rice and rising prices originated with inclement weather conditions in rice-producing countries and geopolitical fallout due to the war in Ukraine (Part XV Twitter thread). Global food insecurity was a developing issue well before Russia refused to renew an agreement this month that allowed the shipping of grains from Ukraine through the Black Sea. The Kremlin’s decision to impose a naval blockade and launch strikes on port facilities was the result of Ukraine’s second attack on the Crimean Bridge since last fall. Weaponry used in the attack was reportedly stored in port depots that arrived through maritime humanitarian corridor ports in Odessa and along the Danube River via Reni. At the Russia-Africa summit in Saint Petersburg this week, Putin promised free grain supplies to six African nations to replace Ukrainian grain exports.

“‘I have already said that our country can replace Ukrainian grain, both on a commercial basis and as grant aid to the neediest African countries, more so since we expect another record harvest this year,’ Putin said. He also said Russia intends to ship up to 50,000 tonnes of grain aid to Burkina Faso, Zimbabwe, Mali, Somalia, Eritrea, and the Central African Republic in the next three to four months.”

 

The situation is multifaceted for India, and the export ban was implemented prior to the fall wedding season to stabilize prices. India’s Food and Consumer Affairs Ministry said the move was taken to “ensure adequate availability” in the country and “allay the rise in prices in the domestic market.” India exports rice to more than 140 countries. Key buyers that are likely to suffer the most include Bangladesh, Nepal, Benin, Angola, Cameroon, Djibouti, Guinea, Ivory Coast, and Kenya, who are major buyers of non-basmati rice. Iran, Iraq, and Saudi Arabia mainly buy premium basmati rice from India.

“The Centre on July 20 banned the export of non-basmati white rice with immediate effect to boost domestic supply and help control inflation. Non-basmati white rice accounts for nearly 25-30% of total rice exported. Volume wise, India exported 6.5 million tonnes of this variety in FY23, compared to 5.3 million tonnes in the previous financial year. The ban comes when rice prices have increased by over 11.5% YoY and 3% in the past month. Concerns over production in the kharif season due to inadequate rainfall in the major growing states of Bihar (-40% cumulative deficit), Jharkhand (-44% deficit), Odisha (-15% deficit) and excess rains in other major states like Punjab (+52%) and Haryana (+65%) played a part in the government’s decision… Rice stocks in the central pool as on July 1 is around 48.65 million tonnes, almost 13% less than last year. Last year, the government imposed a duty of 20% on all non-basmati rice exports to curb overseas shipments, but it has failed to curb the exports as international prices were high… In the first quarter of the current financial year, about 1.55 million tonnes of white non-basmati rice was exported vs. only 1.15 million tonnes last year, a 35% surge. ‘This sharp increase in exports can be ascribed to high international prices due to the geopolitical scenario, El Nino sentiments, and extreme climatic conditions in other rice producing countries,’ an official statement said.” – Rediff, Jul. 26

Before you race out the front door and buy rice for your prepping pantry, consider the following information via Healthline about different types of rice, how they are processed, and their nutritional value. Unprocessed whole grain rice varieties contain the bran and germ, providing more of specific nutrients like fiber, protein, flavonoids, antioxidants, and certain vitamins and minerals.

• White Rice: White rice has had the husk, bran, and germ removed, then enriched with a basic vitamin and mineral. Though this process extends the shelf life of the final product, the nutrients and beneficial plant compounds are lost during processing. As a result, it contains less fiber, protein, and certain vitamins and minerals than brown rice. It is also much lower in antioxidants than brown, black, red, or wild varieties.
• Basmati Rice: White basmati is processed with the hull, bran, and germ removed. In brown basmati, only the hull gets removed. It is native to India and Pakistan, with India being responsible for 2/3 of the global supply. Basmati rice has been cultivated for thousands of years in the foothills of the Himalayas.
• Brown Rice: A whole grain rice that has had the outer protective shell, known as the hull, removed. Unlike white rice, it still contains the bran layer and the germ, both of which pack a significant amount of nutrients.
• Black (Forbidden) Rice: Black rice varieties, such as Indonesian black rice and Thai jasmine black rice, have a deep black color that often transitions to purple when cooked. It is sometimes referred to as “forbidden rice” because it is said to have been reserved for royalty in ancient China. Black rice has the highest antioxidant activity of all the varieties.
• Red Rice: Himalayan red rice and Thai red cargo rice are deeply pigmented and contain an impressive array of nutrients and beneficial plant compounds. This type is higher in protein and fiber than white rice varieties, but where it really shines is in its antioxidant content. Like black rice, it is packed with flavonoid antioxidants, including the anthocyanins apigenin, myricetin, and quercetin.
• Wild Rice: Though wild rice is technically the seeds of aquatic grasses, it is popularly used like rice in the kitchen. It is recognized as a whole grain and contains slightly more fiber and protein than white rice, making it a more filling choice.
• Premade and Packaged Blends: While certain packaged rice blends can make a healthy choice, many others are high in calories and sodium.

There are no ETFs or stocks that offer pure-play exposure to rough rice prices. Besides due diligence to identify companies that are tied to the hip with rice, the only pure play is through CME options and futures contracts.

Rice Cultivation in India – Wild Films India, 2018

 

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