Rice markets could face further turmoil as Thailand urges farmers to plant less rice

For every kilogram of rough rice grown, an average of 2,500 litres of water is needed. In comparison, alternative crops like millets require between 650 to 1,200 litres of water for the same amount harvested.

Just last month, India banned exports of non-basmati white rice, a move aimed at ensuring “adequate availability” in domestic markets, the government said.

India is the world’s leading rice exporter and accounts for 40 per cent of the global rice trade, and the ban is expected to affect millions.

“Global rice price will have the potential to increase further in the event that rice production in Thailand decreases significantly year on year,” Rabobank’s senior analyst Oscar Tjakra told CNBC.

However, it still remains to be seen whether Thai farmers will follow the directive, said Tjakra.

“Thai farmers might still choose to plant rice on the back of the current high global rice export prices environment,” he said.

Rice prices are already hovering at decade highs, in part due to tighter supplies when the staple became an attractive alternative as prices of other major grains surged following Russia’s invasion of Ukraine in February 2022.

“Thailand often pushes for water conservation, but it has little effect on the use of water as the water rights system has yet to be developed,” said Jeremy Zwinger, CEO of The Rice Trader told CNBC in an e-mail.