“Back then, rising rice prices in some economies quickly spilled over into other markets as consumers and governments across the region scrambled to secure supplies. It also lifted the prices of other staples, such as wheat, as buyers shifted to alternatives.”

Global rice crisis reminiscent of 2008 Asian food price scare

Frederic Neumann, the Chief Asia Economist at HSBC Global Research, highlighted in a note to clients that skyrocketing rice prices present hurdles for central banks combating high inflation, Zero Hedge reported.

He drew parallels between the current surge in food prices and the one that rocked the world in 2008, noting that shortage fears are rising for the staple food that feeds billions of people.

“The memory of the 2008 Asian food price scare sits deep,” Neumann wrote. 

“Back then, rising rice prices in some economies quickly spilled over into other markets as consumers and governments across the region scrambled to secure supplies. It also lifted the prices of other staples, such as wheat, as buyers shifted to alternatives.”

Rice from Asia accounts for about 90 per cent of the global production.

The El Nino weather phenomenon has sparked heavy rainfall and droughts across top-producing regions, such as India, which has imposed export restrictions to ensure adequate domestic supplies, Zero Hedge reported.

Neumann said global rice imports as a share of consumption have doubled over the past two decades, and are up about four percentage points since the 2008 food crisis.

“This means that disruption in one economy could have much bigger spillovers into others than in the past.” 

The analyst concluded: “Go easy on the curry”, Zero Hedge reported.

Published Date: September 16, 2023