The authorities extended the embargo on rice exports: what will happen to prices

Rice of the new crop in the south of Russia has just been sown, and the Ministry of Agriculture of the country is already proposing to ban its export until the end of this year. You don’t have to be a visionary to understand that we only have enough rice for our internal needs. This is the third embargo on rice exports from the country since 2022. What happened to this cereal?

Only over the past week, according to Rosstat, rice prices increased by an average of 0.2%. The Statistical Office reports that in June the average price of 1 kilogram of rice is 111 rubles. However, on the shelves you can find kilogram packages and 180-200 rubles each. The export ban that is being introduced (there is no doubt that the Ministry of Economic Development will support the farmers’ initiative) is unlikely to stop the rise in the price of cereals in the retail network.

In fact, Russia is not such a great rice power that the export ban would have any serious impact on world prices or the planet’s food security. We export less than one percent of world production outside the country. This is not wheat, which we do not know how to quickly sell abroad. Usually Russia produces about 1 million tons of rice per year, exports about 200 thousand tons – mainly to neighboring countries. The domestic needs of Russians for this product do not exceed 600,000 tons: this includes 200,000 tons of imported long-grain rice, which is not grown in our country, but is in high demand, in particular, among pilaf lovers.

But why are we closing our deliveries? Troubles with rice began in April last year, when an accident occurred at the Fedorovsky hydroelectric complex in the Krasnodar Territory, the main supplier of rice in Russia. That’s when it became clear that the problem came seriously and for a long time. It is not clear why this man-made disaster happened. After all, the dam was repaired, put in full order back in April. The state allocated serious funds for its overhaul. And so, when the dam, it would seem, was overhauled, in mid-May it was also completely destroyed. A year ago, about 40% of rice fields (plantations) in the region were without water, and the Russians were at risk of being left without domestic rice.

It was then that export bans began – first until the end of 2022, then until June 30 of this year. And now for the third in a row – until the end of 2023 …

Most likely, the rice harvest this year will not be a record one, to put it mildly. Therefore, the embargo on exports is maintained indefinitely, and it is possible that rice prices will go uphill.

It turns out that when the Russians start stocking up on rice and buckwheat, they are doing the right thing. Indeed, many of our fellow citizens are still being rescued by stocks of cereals made during the coronavirus pandemic. They have no need for the troubles of the Fedorovsky waterworks, for a complex irrigation system, locks and water levels on rice plantations. Stock, as they say, the pocket does not pull.

However, as Mikhail Radchenko, executive director of the National Rice Union, told us, Kuban peasants have nothing to do with the prices for rice groats in stores.

– By last year, the wholesale price has not changed much, – he says. – Groats have risen in price by only 4%, although inflation in 2022 was under 13%. Prices are raised by packers – they send our goods to trade in bags of 25 and 50 kilograms. Accordingly, retail chains also increase prices. Our selling wholesale price is within 69-70 rubles per kilogram.

– What are the prospects for the rice harvest this year? If an export ban has been introduced, does it mean that there are difficulties?

– It is expected that in Russia we will collect about 1 million 50 thousand tons. The Ministry of Agriculture demands 1.2 million tons from rice growers to ensure their own food security and taking into account various problems. Since about 150,000 tons are missing from this volume, the agency extended the export ban until the end of the year. Krasnodar rice growers this year increased their sown area by 18,000 hectares.

– According to our information, the Fedorovsky hydroelectric complex has not yet been repaired, how will you solve the issue of irrigating the areas, where will you get water?

– Water resources this year are quite enough, they are even in abundance. Now the problem is where to put the water from the Krasnodar reservoir, we have had heavy rains.

– Domestic rice growers are sometimes criticized for not growing long-grain rice. We buy it in Vietnam, Thailand or India…

– Not this year, but already in the next year 2024, we will receive approximately 7-10% of our long-grain rice in the region.