Everyone Is Preparing For A Food Shortage. That Could Cause One | The Reason Why

Biryani, sushi, paella, pilaf, risotto, and jollof. They all have one thing in common: rice. But that's getting more expensive. And countries are preparing for more.

The war in West Asia is one reason. But weather uncertainty has become the bigger culprit, with El Niño raising concerns about production across Asia.

International rice futures are trading above $15 per 100 pounds, or about Rs. 32 per kg. They are up around 32% YoY and are now close to their highest level since September 2024.

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With different crises at their doors, the governments don't want to take chances. Many Asian countries are building up rice stocks, prioritising food security.

They are becoming the ants in the old ants-and-grasshopper story: preparing for winter before it arrives. But can they avoid that situation? Or aggravate it?

India: The World's Biggest Cushion

Let's start with India, the largest rice exporter.

India entered 2026 with comfortable rice stocks. It rose from 31 million tonnes in January to 40 million tonnes by August. Including paddy, it crossed 75 million tonnes.

But the crop outlook has worsened. The US Department of Agriculture (USDA) has cut its 2025-26 crop estimate from 154 million tonnes to 147 million tonnes. The main cause is poor rainfall. The rainfall between June and August was 14% below normal. September is not going to be exceptional either.

That impacted prices. Export prices hit a one-year high by early September, while domestic retail prices rose 7% over the past year.

Then there is ethanol. The use of surplus rice as a feedstock for ethanol has risen in recent years.

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During the 2022-23 Ethanol Supply Year, less than 0.2 million tonnes were diverted towards making ethanol. By 2026-27, this is set at 7.2 million tonnes. Another 5.5 million tonnes of broken rice was recently auctioned as sugar and maize supplies tightened.

So rice now has four competing uses: domestic consumption, exports, government reserves and ethanol.

India still has enough stocks. The government can release reserves, restrict exports or reduce rice use for ethanol, if needed. But there is a catch.

Rice stored in Indian godowns is rice not available for global consumption. India's stocks may equal more than a year of global rice trade, but if domestic prices rise, the government may prioritise food security and inflation over exports.

That could remove an important cushion from the global market, and push prices even higher.

Thailand: Supply Concerns Ahead

Thai 5% broken rice prices have risen by about 20–25% in 2026. There are two main causes.

First, Malaysia and the Philippines are rebuilding rice stocks. Thai exports to them have jumped sharply in 2026. For instance, exports to Malaysia were more than four times higher in the first four months of 2026 than a year earlier.

Second, water risks have worsened. In the Chao Phraya basin, usable water in four major dams was 48%, down from 67% a year earlier.

Moreover, experts believe the next season may also be dry due to El Niño. That could put further pressure on supplies and prices.

Vietnam: Another Exporter Under Pressure

Vietnamese 25% broken rice prices rose 7.5% in August. The reasons are: harvest delays, higher input costs, lower domestic production and reduced imports from Cambodia, which tightened supply. Its exports fell by 5% year-on-year in the first eight months, reducing the global supply.

The Philippines Is Buying Ahead

The Philippines is one of the world's biggest rice importers.

By August 13, it had imported around 3.46 million tonnes, already above the 3.39 million tonnes imported in all of 2025. The government expects it to reach 5 million tonnes by December.

Last year, the government suspended imports to protect farmers. This year, it is allowing imports to build stocks. It believes El Niño could hurt production.

Simply put, the Philippines is buying rice before a shortage happens. That pulls future demand into the present and puts more pressure on exporters such as Vietnam and Thailand.

Stockpiling Beyond Asia

The stockpiling trend is also spreading beyond Asia. Finland, Sweden and Norway are rebuilding food reserves, while Sweden is asking private producers to hold staples such as wheat, rice, cooking oil and sugar. The UK is taking a different approach. It is encouraging households to keep several days of food and water at home.

These measures are too small to move the global market on their own. But they show a wider shift: governments want food stocks before disruption hits.

2007–08: When Fear Became the Crisis

The 2007–08 episode is the closest historical example of this dynamic.

It began with India. In October 2007, India set a minimum export price of $425 per tonne for non-basmati rice. Since this was above the market price, most Indian rice wasn't tradable. India

raised that floor several times before banning non-basmati exports altogether in April 2008. As global supply fell, international prices jumped.

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But India had ample rice with it. Its rice stocks actually rose 14% that year. Even global production hit a record. The main problem was that this rice was not available to global buyers. Other exporters too imposed restrictions eventually, while importers started stocking up.

That created a vicious cycle: less rice available for trade → fears of higher prices and shortages → more stockpiling by importers → higher prices → more export restrictions → even less rice available for trade.

Rice prices eventually tripled between November 2007 and late April 2008.

2027 Trap

Covid and recent wars taught the world that you cannot always assume something will be available when you need it. Just-in-case inventory management has replaced just-in-time. That applies to everything — from chips and energy to oils and food grains.

The logic of keeping buffers, early buying and restricting exports always seems sound. But they can have unintended consequences. When everyone prepares for the same shortage, they can make the shortage more likely in the market.

That is the self-fulfilling loop we may risk entering by 2027.

Disclaimer: The views expressed in this article are solely those of the author and do not necessarily reflect the opinion of NDTV Profit or its affiliates. Readers are advised to conduct their own research or consult a qualified professional before making any investment or business decisions. NDTV Profit does not guarantee the accuracy, completeness, or reliability of the information presented in this article.

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