Rice crops threatened by El Nino amid global food insecurity

21 July 20233 min reading

Agricultural markets have been on a rollercoaster ride over the past year due to the Russia-Ukraine war's impacts and tight global stocks, leading to record-high prices for many commodities. However, the rice market has remained relatively stable, thanks to ample global supplies and its lack of direct trade connections to the Ukraine conflict. Despite this tranquility, recent signs of trouble have emerged.

El Nino, a natural and temporary warming phenomenon in the Pacific, is poised to disrupt rice production across Asia due to unusually warm and dry weather. This development could have severe implications for global food security, especially when the world is still grappling with the aftermath of the war in Ukraine. The Asia Pacific region, where 90% of the world's rice is grown and consumed, would bear the brunt of the impact should rice production fall short.

El Nino occurrences have been exacerbated by climate change, with the US National Oceanic and Atmospheric Administration announcing an earlier than usual El Nino in June. Scientists warn that there is a one in four chance it will intensify to supersized levels.

Rice farmers in Asia, particularly in India and Bangladesh, face concerns as a strong El Nino typically leads to reduced rainfall, affecting the crucial monsoon season and planting period. India's Kharif, the main rice crop planting season, takes place in June-July and heavily relies on monsoon rainfall.

The situation is raising alarm bells, with rice prices already on the rise due to production shortfalls. In Thailand, the average price of 5% broken white rice in June was approximately 16% higher than last year's average.

Global rice stocks have been depleted since the previous year, partly due to devastating floods in Pakistan, a major rice exporter. This year's El Nino could compound issues in rice-producing nations, with reduced access to fertilizer due to the war and some countries' export restrictions on rice. Myanmar, Cambodia, and Nepal are among the most vulnerable countries, according to a recent report by BMI, a research firm.

Global average temperatures have hit record highs, while monsoon rains in India have been lighter than usual by the end of June. Indonesia's President Joko Widodo has urged careful water management in anticipation of an extended dry season. Authorities in the Philippines are also taking precautions to protect vulnerable areas by managing water resources efficiently.

Several countries are preparing for potential food shortages. Indonesia, significantly affected by India's decision to restrict rice exports last year due to reduced rainfall and heat waves damaging wheat crops, is taking steps to ensure food security. India has announced plans to send over 1 million tons of rice to Indonesia, Senegal, and Gambia to meet their immediate needs.

Fertilizer availability poses another challenge for rice-producing nations, with South Asia and Southeast Asia accounting for a significant portion of global rice production and exports. These regions heavily depend on fertilizer imports from countries like Russia, China, Belarus, Canada, Morocco, Saudi Arabia, and Israel. However, restrictions on fertilizer exports from Belarus, China, and Russia due to various factors, including sanctions, have prompted countries to seek alternative sources.

China restricted fertilizer exports last year to control domestic prices after sanctions affected Belarus, its ally, for human rights violations. The ongoing war in Ukraine has disrupted shipments of key chemical fertilizers, such as potash, phosphorus, and nitrogen. While Bangladesh managed to secure new potash suppliers in Canada, many other countries are still scrambling to find alternative sources.

As the world faces complex challenges with the confluence of El Nino and the aftermath of the Russia-Ukraine war, ensuring global food security remains a top priority for policymakers and agricultural stakeholders.

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