Global Rice Prices Drop, Easing Consumer Strain

From the Philippines to Senegal, millions of people are experiencing relief as rice prices tumble from 15-year highs, making it easier for families to afford the staple grain. After a year of favorable weather, global stockpiles have risen for the second consecutive season, with major exporter India lifting long-standing export restrictions. This surge in supply has driven the price of Thai white rice, an Asian benchmark, to its lowest levels since 2022, falling more than 30% from last year’s peak.

While it may take time for wholesale price changes to reach consumers, the price drop is already providing much-needed respite to households facing rising living costs.

“I don’t have to worry all the time about how to feed my children,” said Yassine Toure, a cook in Dakar, Senegal. Her family of 12 consumes 25 kilograms (55 pounds) of rice weekly. Toure explained that at one point, rice had become so expensive it was considered a luxury, but now the drop in prices has brought some relief. “Now we can finally breathe a bit easier,” she added.

The surge in rice prices began several years ago due to adverse weather conditions linked to El Niño, which hurt production of the water-dependent crop. In response, India imposed export bans to protect domestic supplies, exacerbating the shortfall. However, improved rainfall in the past year has bolstered rice production in Asia, and forecasts suggest that the El Niño phenomenon will not impact the 2025 Indian rainy season, fueling expectations that international prices will continue to fall. Additionally, India’s recent decision to lift its export restrictions further promises to stabilize global rice supplies.

“As the world’s largest rice exporter, India is eager to regain the markets it lost due to export controls,” said Peter Timmer, Professor Emeritus at Harvard University, an expert on food security.

The United Nations Food and Agriculture Organization (FAO) recently raised its global rice output forecast for the 2024-25 season by 3.6 million tons, bringing the total to 543 million tons. This increase is largely driven by strong crop prospects in India, the world’s second-largest rice producer. Moreover, Cambodia and Myanmar are also expected to see higher-than-previously-anticipated rice production, further boosting global supply. As a result, ending stockpiles are projected to rise to 206 million tons, up from 200 million tons in the previous year.

While the price drop is a positive development for consumers, it presents challenges for rice producers, who are seeing shrinking profit margins. If prices continue to fall, farmers may reduce planting in the upcoming season, potentially leading to future supply shortages, according to Shirley Mustafa, an economist at the FAO.

Farmers in Thailand have already protested the low prices, with some calling for greater government support. Thai growers argue that the current rice prices are insufficient to cover production costs such as fertilizers and labor. In response to similar concerns, Indonesia’s food procurement agency recently began buying more rice from local farmers at a guaranteed price, a mechanism in place to protect farmers from volatile price fluctuations.

“Low prices are detrimental to producing countries like India, as they reduce the profits of both exporters and farmers,” said B.V. Krishna Rao, president of the Rice Exporters Association.

Thai farmer Sutharat Kaysorn, who owns 100 acres of rice fields in Sing Buri province, described the financial strain on her business. Unable to repay her loans, Kaysorn fears she will not be able to secure credit for the next harvest. “The current paddy prices are not even enough to cover production costs,” she said.

Retail rice prices are influenced by several factors, including the reserves of importing nations, local currency strength, transportation costs, and the cost of financing overseas purchases, according to the FAO’s Mustafa. In countries like the Philippines, where rice constitutes a significant portion of household budgets, policymakers are particularly focused on its impact on broader inflation. Last month, the Philippine government intervened by declaring a food security emergency and releasing rice buffer stocks, which helped bring down prices and ease the burden on consumers like Fheri Oris.

“The savings are not substantial but help relieve the pressure on our household budget,” said Oris, a rice vendor in Batangas province. “When prices fall, people tend to buy more. I hope it stays that way.”