- India’s Export Ban Sparks Global Rice Price Concerns
- The Impact of India’s Prohibition on Non-Basmati White Rice Exports
- Global Food crisis at Risk as India Halts Rice Exports
What happens when India prohibits exports of a food staple that is vital to the nutrition of billions of people worldwide?
India prohibited the export of non-basmati white rice on July 20 to curb growing domestic prices. This was followed by reports and recordings of panic buying and empty rice shelves in Indian grocery stores in the United States and Canada, which drove up prices.
There are thousands of cultivated and consumed rice varieties, but only four are traded internationally. The majority of the global rice trade consists of slender long grain Indica rice, while the remainder consists of fragrant or aromatic rice such as basmati, short-grained Japonica rice used for sushi and risottos, and glutinous or viscous rice used for desserts.
India is the leading exporter of rice, accounting for approximately 40 percent of the global trade in cereal. Thailand, Vietnam, Pakistan, and the United States are also major exporters.
China, the Philippines, and Nigeria are significant consumers of rice. There are “swing buyers” such as Indonesia and Bangladesh that increase imports when domestic supply is insufficient. Africa’s rice consumption is considerable and growing. In nations such as Cuba and Panama, it is the primary energy source.
India exported 22 million tonnes of paddy to 140 countries last year. Six million tonnes of this was the relatively inexpensive Indica white rice. (The global rice commerce was estimated at 56 million tonnes.)
Seventy percent of the global trade is dominated by Indica white rice, and India has now ceased exports.
This is in addition to the country’s prohibition on broken rice exports last year and a 20% export tax on non-basmati rice.
Unsurprisingly, the export moratorium imposed in July has sparked concerns about soaring global rice prices. Pierre-Olivier Gourinchas, the chief economist of the IMF, believes that the prohibition would increase prices and that global grain prices could increase by up to 15% this year.
According to FAO rice market analyst Shirley Mustafa, India’s export ban occurred at a horrible moment.
Since early 2022, global rice prices have been consistently increasing, with a 14% increase since June of last year.
Second, supplies are limited because the new crop will not arrive on the market for approximately three months.
Uneven monsoon rainfall in India and flooding in Pakistan have impacted supplies in South Asia. Due to a rise in the price of fertilizers, rice cultivation has become more costly.
High inflation and currency devaluation have raised trade financing and import costs for various nations.
“We have a circumstance in which importers are limited. “It remains to be seen if these buyers will be able to withstand additional price increases,” says Ms. Mustafa.
India has a staggering 41 million tonnes of rice – more than three times the buffer requirement – in public granaries for its strategic reserve and the Public Distribution System (PDS), which provides over 700 million impoverished people with access to inexpensive food.
Since last October, rice prices in India have risen by more than 30 percent, resulting in increased political pressure on the government in advance of next year’s general elections. In addition to several upcoming state elections, the rising cost of living poses a challenge to the government.
Joseph Glauber of the International Food Policy Research Institute (Ifpri) told me, “I suspect that the action to ban non-basmati rice exports is largely precautionary and, hopefully, it will be temporary.”
In India, according to agriculture policy expert Devinder Sharma, the government is attempting to avert a production shortfall, as rice-growing regions in the south face the danger of dry rain as the El Nino weather pattern sweeps through later this year.
Many think that India should avoid rice export restrictions because they are detrimental to global food security.
According to Ifpri, more than half of the rice imports in approximately 42 countries come from India. And India’s market share in rice imports in many African nations exceeds 80%.
In leading rice-consuming nations in Asia, such as Bangladesh, Bhutan, Cambodia, Indonesia, Thailand, and Sri Lanka, rice accounts for between 40% and 67% of daily calorie ingestion.
Ms. Mustafa explains, “These bans disproportionately affect the poor, as they spend a greater proportion of their incomes on food.” “Rising prices could force them to reduce the amount of food they consume, switch to less nutritious alternatives, or reduce expenditures on other necessities such as housing and food.” (Indeed, India’s moratorium does allow for certain government shipments to countries based on food security.)
Export restrictions are not novel. Since Russia invaded Ukraine in 2014, Ifpri states that sixteen nations have food export restrictions, up from three. Indonesia, Argentina, Turkey, and Kyrgyzstan banned palm oil, cattle, and grain products. During the initial four weeks of the Covid pandemic, approximately 21 nations imposed export restrictions on a variety of goods.
But, according to experts, India’s export moratorium poses greater dangers. Ashok Gulati and Raya Das of the Indian Council for Research on International Economic Relations (Icrier), a Delhi-based think center, caution that it would “certainly cause a spike in global prices of white rice” and “harm the food security of many African nations.” For India to become a “responsible leader of the Global South in the G-20,” it must avoid unexpected restrictions. “However, the greater damage will be that India will be perceived as an extremely unreliable rice supplier,” they say.
