Rice price surge highlights long-term climate risks

RICE bowls around the world are under threat, as prices of the staple grain soared to a 15-year high in recent weeks. The surge was prompted by an abrupt export ban by India, following poor weather conditions. This highlights a much more complex problem for the global rice trade – growing climate risks that require urgent attention.

In July, India halted exports of non-basmati white rice varieties, in a bid to keep domestic prices under control. Retail rice prices had risen 3 per cent in the span of a month, following heavy monsoon rains that damaged crops. With India accounting for 40 per cent of global rice exports, the move sent global trade of the commodity into turmoil.

In Thailand, the second-largest rice exporter after India, the price of a benchmark variety – Thai white 5 per cent broken rice – spiked to US$648 per tonne, the highest point since 2008. While the country enjoys a comfortable rice surplus every year, the market is now “in chaos” as exporters cannot offer price quotations amid the uncertainty, an official from the Thai Rice Exporters Association told Nikkei Asia.

The impact has reverberated across South-east Asia, with countries scrambling to secure supplies. Malaysia implemented limits on rice purchases by consumers, while Indonesia inked an agreement with Cambodia – the first in over ten years – for as much as 250,000 tonnes of rice per year. Singapore gained an exemption from India’s ban, in view of the “special relationship” between both countries.

Such trade deals are vital, yet only a near-term fix. The deeper issue is how climate change impacts rice production. More unpredictable weather, including severe droughts and floods, has made it harder for rice farmers to judge when they should plant seeds. The return of the El Nino dry weather pattern this year has added to the uncertainty.

At the same time, rice cultivation itself is a major contributor to climate change. The crop accounts for about 10 per cent of global methane emissions, and over a quarter of South-east Asia’s emissions of the greenhouse gas, based on the World Bank. This is because rice is grown in flooded fields, which allow methane-releasing bacteria to thrive.

With rice cultivation being both a victim and perpetrator of climate change, there is an urgent need for action on both fronts. More research and investments are needed to develop rice varieties and cultivation methods that are resilient to the effects of climate change.

Meanwhile, more farmers need to be trained in climate-smart agricultural practices, such as sustainable irrigation methods and the recycling rather than burning of rice residues.

Countries such as Vietnam and China have already rolled out sustainable rice cultivation projects, and more can be done to build upon these efforts. As a capital-raising hub, Singapore is well-positioned to encourage impact investments into such projects. There are signs of growing interest; for instance, state investor Temasek and its subsidiary GenZero have teamed up with Bill Gates’ climate fund and a regional venture builder to launch a startup focused on decarbonising rice cultivation.

As a staple of South-east Asian diets, rice is not just a matter of food security. It is also deeply intertwined with cultures and national identities. The rice crisis offers a glimpse of just how vulnerable the crop is to climate risks, and how more needs to be done for rice bowls to stay filled.