March 13, 2024/FBNQuest Research
Today, we turn our attention to the most recent edition of the Food Security report published by the World Bank. Compared to the previous edition, the agricultural price index remained unchanged m/m while the export price index increased by +5% m/m. In contrast, cereal prices declined by -5% m/m. Like previous reports, the Bank pointed out the dominance of rising domestic food inflation in low, middle, and high-income countries.
Driving the higher export price index was growth in cocoa and cotton, which increased by +11% m/m and +4% m/m, respectively.
Compared to the last report, the prices of maize, wheat and rice saw declines of -9% m/m, -5% m/m and -1% m/m, respectively.
Specifically, the bank highlighted the ongoing effects of India’s rice export ban on global rice markets.
Since July 2023, when India implemented the ban on the export of non-basmati white rice, the benchmark price of Thai white rice has increased by +22%.
Notably, importing countries in South and South-East Asia, as well as Sub-Saharan Africa have been affected by the disruptions in global supplies brought about by India’s rice export restrictions. This coupled with rice production losses caused by EL-Nino in other key rice exporting countries like Thailand and Vietnam has resulted in the affected importing countries exploring alternative rice supplies.
With respect to the Sub-Saharan region, the bank pointed out that the region has faced difficulty in the supply of rice due to India’s export ban. Consequently, countries like Kenya, Madagascar and Senegal have witnessed a sharp drop in rice imports from India. As a result, these nations are now importing more rice from other suppliers, such as Brazil, Pakistan, and Thailand.
While the bank pointed out that the lesser impact of El-Nino may improve rice production conditions, the length of India’s export prohibitions remains uncertain.
The bank mentioned that the presence of these restrictions beyond India’s forthcoming elections will further exert additional pressure on global rice markets and potentially result in higher prices and increased food insecurity in importing countries.
According to the bank, disasters now have an unparalleled global influence on agrifood and agricultural systems, causing substantial loss and destruction.
These disruptions, which include pest outbreaks, armed conflicts, extreme weather events like floods and wildfires, have a variety of negative effects, and endanger the sustainability of the agricultural industry and food supply, globally.
