African consumers could face rice shortages

NAVEEN THUKRAL, RAJENDRA JADHAV AND AYENAT MERSIETightening global supplies of basic foodstuffs and disruptions to shipping caused by the coronavirus pandemic are driving up the cost of rice, the most important staple food for billions of people worldwide.Rising food prices are a worrying trend in countries that depend on imports, while the cost of rice is politically sensitive in many parts of Asia and Africa. A spike in the price of the grain led to unrest in several countries during the world food crisis of 2008.Benchmark rice prices jumped 20% to 45% in key Asian producers last year, while demand for lower-quality rice as an alternative animal feed and soaring shipping costs are raising concerns that poorer nations that rely on imports may face shortfalls in supplies."There are no immediate supply issues in Africa, but if exports from Asia get curbed it could lead to worries between June and October which is traditionally a lean production period for northern and western Africa," said FAO rice economist Shirley Mustafa in Rome."Logistical bottlenecks could lead to food supplies getting squeezed and food inflation, potentially aggravating the economic hardship caused by the Covid-19 pandemic," Mustafa added.Sub-Saharan Africa is a major rice buyer, depending on imports for 40% of regional consumption, while in many parts of South and Southeast Asia by far the top rice producer and exporter rice is served at most meals.Corn spill overThe price rises come as measures to slow the coronavirus pandemic distorted global food supply lines in 2020, adding to concerns about food security.At the same time strong demand from China sent global cereal prices to their highest in 6 years, according to the United Nations Food & Agriculture Organization (FAO).China's grain consumption was so strong in 2020 that it not only depleted the county's stockpiles, but also boosted crop imports to record levels and helped run up prices of corn, sorghum and barley largely used to feed animals.A 25% jump in the price of corn, a key feed-grain ingredient, has spilled over into food-grade rice, as some animal feeders switch to cheap rice products that can also be fed to animals, such as 100% broken rice, a by-product of rice milling.The cost of this variety of rice has climbed to US$280 a tonne, free on board, at some of Indian ports, from US$260 in December and is likely to rise further, according to local suppliers."Traditionally, African countries buy 100% broken rice since it is cheaper," said Himanshu Agarwal, executive director at Satyam Balajee, India's biggest rice exporter."But lately Asian countries such as Vietnam and China have started buying 100% broken rice and are paying a premium over prices paid by African buyers."China, the world's top rice producer, imported the grain from India for the first time in at least three decades last month."China is buying 100% broken rice for noodles as well as for feed," said a Mumbai-based dealer with a global trading firm.The global rice market was also clipped by drought in Southeast Asia which caused shipments from rice exporters Thailand and Vietnam to drop more than a quarter in January through November 2020 compared to the same slot in 2019.Prices of benchmark 5% broken rice from Thailand and Vietnam are up 19% and 45% respectively from a year ago, while domestic paddy prices in mainland China are up around 25%, according to Refinitiv Eikon.Container shortageSome high-end rice supplies were also hit by a global shortage of shipping containers, frequently used to carry bagged rice and other foods.Containers are taking longer to unload in many countries due to coronavirus restrictions, yet remain in high demand due to booming e-commerce and for shipments of personal protective equipment.This has led to a surge in the cost of shipping goods via container, and lengthy delays."From Pakistan for example, we used to pay US$850 or US$900 per container. Now, we're looking at US$1 650 to US$2 100 per container," said Mital Shah, managing director of Kenya-based Sunrice, one of East Africa's largest rice importers.Kenya consumes roughly 700 000 tonnes of rice annually, of which around 600 000 tonnes are imported, according to the United States Department of Agriculture.The freight cost for shipping a tonne of rice from India to Africa has tripled to US$150 from US$50 in November."It's a lot to ask for a commodity which costs less than US$300 a tonne," said one rice trader, referring to Indian broken rice.African importers are banding together to buy bulk cargoes, traders and analysts said, but combined with the lower shipments from Southeast Asia, the container crunch has lifted prices and pinched rice supplies in key African markets."In another month or two, we will see some shortfalls of rice here," said Sunrice's Shah in Kenya. "We may be behind by 50 000 to 60 000 tonnes."- Nampa/Reuters

African consumers could face rice shortages

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Namibian Sun 2025-04-03

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African consumers could face rice shortages

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Namibian Sun 2025-04-03

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