India’s rice export ban is boosting prices around the world, increasing the risk of political instability in Asia and Africa, according to the head of a United Nations agency.
Prices for the crop, a staple for half the world, surged to the highest in almost 15 years after the top shipper began curbing exports. India accounted for nearly 40 percent of the global rice trade in the past three years. Soaring prices are fueling concerns about food insecurity for billions of people in Asia and Africa who depend on the grain.
“Rice, especially in Africa, can certainly bring potential conflict or social unrest, which at this moment in time would be quite dangerous,” Alvaro Lario, who leads the International Fund for Agricultural Development, said in a Thursday interview in New York.
The export ban is bringing back memories of 2008, when a global rice crisis put 100 million people at risk, many in sub-Saharan Africa. Back then, both Vietnam and India restricted exports. Food shortages have also contributed to unrest in the past, with surging wheat prices helping spark the Arab Spring that toppled governments just over a decade ago.
The impacts of bans “go beyond the borders of the countries” implementing such measures, Lario said. Rice is the “main concern” for food security—even more so than wheat, he said.
“Export bans have a lot of impact, especially on the most vulnerable, by raising prices and having a shock on prices,” he said. “Generally they are not positive, neither for the local populations in the medium term, nor for the other countries.”
Some regions in Africa that are more reliant on rice imports are already seeing impacts from higher prices, Lario said.
“We have to understand that many of these people who consume this type of crop are sometimes on the brink of poverty,” he said.
Corn supply boom
A global sugar crunch that drove prices of the sweetener to an 11-year high is finally poised to ease—and it’s thanks to a crop that might seem totally unrelated.
Corn output from agricultural powerhouse Brazil is surging, making it more profitable to use the grain to produce ethanol—a key fuel that powers cars in Latin America’s biggest economy. As a result, mills that crush costlier cane are looking to produce more sugar and less biofuel.
“Anyone with money today is either investing in corn ethanol, or adding capacity to produce sugar,” said Eder Vieito, senior commodity analyst at Green Pool Commodity Specialists.
Falling sugar prices would be a welcome respite for consumers battling rampant food inflation. A gauge of agricultural commodity prices posted its biggest gain in 16 months in July, before retreating somewhat in August. Extreme weather has damaged sugarcane in India, the world’s second-largest producer after Brazil.
Corn is taking a bigger share of the ethanol market in Brazil, which trails only the US among global producers of the biofuel. Ethanol from corn will account for nearly a fifth of all output of the fuel this season, from nearly zero five years ago. By 2033, its share could climb to as much as a third of total supply, consultancy Datagro predicts.
“Biofuel expansion will predominantly come from corn,” said Renato Pretti, strategic planning officer at ethanol producer Cerradinho Bioenergia SA. The company, which uses both corn and sugarcane as raw material for fuel, is one of a growing number of mills diverting more cane to produce sugar and even investing in new sugar machinery.
Rising corn output in Brazil is allowing for bigger profits from ethanol as sales of byproducts like animal feed mostly cover the cost of the grain. Cane mills, in contrast, recently saw shrinking margins from producing ethanol. The cost of making ethanol from corn was 16 percent lower versus producing the biofuel from sugarcane over the past two years, analysts at bank BTG Pactual said in a report.
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