The world seems to be in the grip of a food crisis. Even before the COVID-19 pandemic, global food prices were on the rise due to the impacts of climate change and regional conflict/migration. The pandemic has further disrupted food supply chains, and the loss of income and jobs has reduced food accessibility and affordability for many low-income populations.
The conflict between Ukraine and Russia has further exacerbated the challenges.
Food prices, which have been on the rise for two years, reached an all-time high in March (nearly 60% compared to 2020), although they fell slightly in April and May. Given that world prices for wheat and maize have increased by 50% and 35% respectively, countries in Africa, South Asia and the Middle East that depend mainly on food imports will face considerable pressure from the market, which can lead to price inflation, supply shortages, and even hunger and malnutrition.
The United Nations has warned that due to the pandemic and the Russian-Ukrainian conflict, the world could face the worst food crisis since World War II. In fact, the level of hunger in the world has already reached a new high, with no less than 1.7 billion people suffering from hunger. Countries like Lebanon, Sri Lanka, Egypt, Sudan and Tunisia are facing severe food shortages, which have led to social unrest.
Amid all this, Thailand and Vietnam’s joint plan to raise rice prices could cause unnecessary panic in the global rice market.
The international rice market has remained stable so far, with world rice prices increasing only slightly. But on May 27, the Thai and Vietnamese governments announced plans to raise domestic rice prices. Thailand and Vietnam are the second and third largest rice exporters in the world, accounting for nearly half of global rice exports, enough to influence the global rice market.
So, will their joint plan cause a global rice crisis?
Even though Thailand and Vietnam plan to jointly raise rice prices, they do not plan to impose restrictions on rice exports. Compared to bans or restrictions on grain exports by other countries, including Russia and India, the impact of a country or a few countries raising food prices in the domestic market is less significant. . But that will depend on how other countries react to the Thai-Vietnamese policy.
The 2007-08 food crisis taught us a lesson. During the first half of 2008, rice prices increased by more than 100%, not because of a shortage of rice supply (in fact, rice production was exceptional in 2007-2008), but because many countries have imposed export bans to ensure food security at home. due to higher world prices for corn and wheat.
If other major rice exporters like India and Cambodia follow the lead of Thailand and Vietnam, let alone go further and restrict rice exports, we could see a repeat of the crisis. of 2007-08, and many of the poor for whom rice is a staple food in rice-importing countries such as the Philippines, Indonesia and some Middle Eastern states could face hunger.
What should international organizations and countries do?
We expect global rice prices to remain stable as global supplies are plentiful, with global rice harvests expected to reach a record high in 2023. Despite a shift in demand for rice for animal feed, any spike in rice prices is unlikely. In addition, Thailand’s rice exports have benefited from a rebound in global demand and, together with the devaluation of the Thai baht, have increased the country’s export competitiveness.
According to China’s Ministry of Commerce, Thailand is expected to export 8 million tonnes of rice this year, up from 6.1 million tonnes last year. Although Thailand and Vietnam are rice exporting powerhouses, they could quickly be replaced by India, China, the United States and Brazil in a very competitive market if the two Southeast Asian countries prohibit or restrict exports. Due to the short growth period and rapid adjustment of the rice market in Southeast Asia, Thai and Vietnamese rice cannot monopolize the international market.
So the world, especially the rice importing countries, should not panic, as panic buying by food importing countries in 2007-2008 was one of the main factors, along with export bans, soaring rice prices.
As for China, the impact of any rise in rice prices on its cereal market would be controllable. Soybeans are the main grain imported by China for animal feed. Overall, China is self-sufficient in major food grains such as rice and wheat, and has relatively abundant rice reserves. China’s rice inventory is about 200 million tons, and the annual import is minimal. Therefore, the overall impact of higher grain prices on China will be limited.
To prevent a rice crisis, United Nations organizations, other global organizations and the international community should call on countries not to restrict rice exports or panic buy rice.
Opinions do not necessarily represent those of China Daily.
The authors are professors at the Academy of Global Food Economics and Policy, China Agricultural University.