India’s partial ban on rice exports adds to global food crisis worries. Aimed at improving domestic availability and lowering prices, concerns arise over its impact on international markets.

India’s recent ban on non-basmati white rice exports has intensified fears about a global food crisis, following Russia’s termination of a significant grain deal. The ban was implemented to combat domestic inflation caused by heavy rains affecting local crops. Despite a 20% duty imposed earlier to curb foreign demand, extreme climate conditions in various countries have led to soaring international demand for Indian rice.

As the world’s largest rice exporter, accounting for over 40% of global shipments, India’s ban applies to non-basmati white rice, which constitutes about 25% of their exports. International sales of Indian rice surged by 35% in the year leading up to June, contributing to a 3% rise in domestic rice prices in the past month alone. Rising food inflation has put pressure on India’s BJP government ahead of national and state-level elections.

The ban has sent the prices of rice from several Asian countries higher on global markets, and traders anticipate further price increases in the coming days. India’s 5% broken parboiled rice variety had already reached near a five-year peak at around $424.50 per metric tonne. Thailand and Vietnam, the second and third-largest rice exporters, have also experienced price rises for their 5% broken rice.

Moreover, Russia’s withdrawal from the UN-brokered Black Sea grain initiative has increased concerns about a global food crisis. Commodity and grain prices worldwide were already affected by Russia’s war in Ukraine. The US has pledged $250 million to establish and expand alternative routes for Ukrainian grain exports. Still, Russia’s warning that any ship leaving a Ukrainian port could be a military target further raises worries about supply disruptions. These developments occur as crucial US growing regions face extreme weather conditions, leading to reduced forecasts for the US wheat harvest and low stocks estimated to be at a 16-year low.

How consumers are going to be affected by rice inflation worldwide?

Consumers across the globe are facing a host of challenges as India’s ban on non-basmati white rice exports worsens the already critical global food crisis. Being the largest rice exporter, India’s decision has triggered reduced availability of this staple food in the international market, leading to potential price hikes in countries heavily reliant on Indian rice imports. Moreover, countries heavily dependent on Indian rice are compelled to explore alternative suppliers and diversify their rice sources, potentially incurring higher logistics costs and necessitating adjustments to trade relationships. The domestic market in India may also face increased competition for rice, putting pressure on local rice producers and calling for supportive measures to shield them from cheaper imports.

Overall, the ban on rice exports from India and the broader global food crisis highlight the interconnectedness of the global food system and the potential ramifications on consumers’ livelihoods, nutrition, and overall economic stability. Governments and international organizations may need to closely monitor the situation and implement measures to mitigate the impact on vulnerable populations and ensure food security during these challenging times.

Source: https://www.cnbc.com/2023/07/21/indias-rice-export-ban-could-send-decade-high-prices-higher.html