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Thailand and Vietnam jointly raise rice prices, what will be the impact
May 29, 2022 21:04 Beijing News Author: Beijing News
On May 27, a Thai government spokesman said that Thailand and Vietnam plan to jointly raise rice prices. After wheat and sugar, the Indian government may also tighten rice exports in order to ensure sufficient domestic supply.
On January 5, 2021, the American magazine National Interest published an article "Top Ten Global Security Risks and Opportunities in 2021", in which the food crisis was listed. The article argues that the world is on the brink of the worst food crisis in 50 years, citing the United Nations as saying that "more people will die from malnutrition and related diseases than from Covid-19".
Fortunately, this prediction did not come true in 2021; unfortunately, it is gradually coming true in 2022. Since the beginning of this year, the food crisis has become a high-frequency word reported by the media, constantly tugging at the heartstrings of ordinary people.
The three major staples, only rice, has not been affected by the conflict between Russia and Ukraine
From an academic point of view, there are two main types of food crises. One is the absolute food crisis, that is, the food production on the earth is not enough for the consumption of the entire population. This was more common before the Industrial Revolution. The other is the relative food crisis, that is, although the total amount of food is sufficient, some people cannot obtain enough food due to distribution reasons.
The food crisis in the modern sense mainly refers to the latter - the relative food crisis. If we continue to subdivide, there are two main reasons for the relative food crisis. One is that food cannot be obtained because of transportation, and the other is that food cannot be bought because of price. In 2022, the coexistence of these two factors will undoubtedly exacerbate the current relative food crisis.
The military conflict between Russia and Ukraine has caused Russia and Ukraine, two important grain exporting countries, to actively or passively leave the international grain market. Because of Western economic sanctions, Russia's grain exports have been greatly reduced, and as a major producer of fertilizer raw materials, it has directly affected the global fertilizer supply. Ukraine, as the "granary of Europe", has greatly weakened its grain export capacity because of the military conflict.
After the export of wheat and corn was blocked, rice became the only food crop among the three major staples that was not affected by the military conflict between Russia and Ukraine. It was once considered to be the main food that helped prevent the world food crisis from worsening.
Against this background, Thailand and Vietnam plan to jointly raise the price of rice for export, which is tantamount to further adding fuel to the already highly tense grain market.
Thailand and Vietnam join forces to improve the bargaining power of the grain market
Rice is Thailand's largest agricultural export. The Thai government forecasts that the country will export at least 8 million tonnes of rice in 2022, a four-year high. Thailand is the world's second largest exporter of rice, and Vietnam ranks third. Vietnam and Thailand account for about 10 percent of global brown rice production and about 26 percent of global exports, according to the U.S. Department of Agriculture. This ratio is enough to affect the global rice market.
Thailand and Vietnam plan to jointly raise the price of rice this time, which is also intended to further improve the bargaining power of the two countries in the world agricultural product market.
More importantly, India, another major grain exporter, is also likely to participate in raising the price of rice or restricting rice exports. Because India exports a large amount of food, not because of its large amount of food, but to earn foreign exchange. This also means that once domestic food is tight, India will also limit food exports.
In fact, following the restrictions on wheat exports, there have been media reports that India is considering imposing restrictions on rice exports. In the total global rice exports, India accounted for as high as 44%.
At present, the food crisis has caused large-scale social unrest and government change in Sri Lanka. If it cannot be contained in a timely and effective manner, it may also trigger political crises in many countries and bring about a new round of political turmoil. Russia has recently proposed conditions for opening relevant ports and resuming Ukrainian grain exports, while India is preparing to ship 40,000 tons of rice to Sri Lanka.
At this time, if Thailand and Vietnam really join hands to increase the price of exported rice, there is no doubt that it will further increase global food prices and global inflation, and worsen the prospect of global food security.
In fact, crops need a growth cycle. If the international market cannot increase food supply in the short term, food protectionism will inevitably rise, and food will increasingly become a "weapon" with geopolitical value.
However, the current food crisis is not an absolute food crisis after all. As long as all countries in the world abandon short-sighted self-interest and do not "weaponize" food supply, it is possible to solve this crisis through cooperation. This kind of cooperation is especially valuable in today's intensified geopolitical game.
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