Home » India Restricts Rice Exports to the World, Here’s the Reason
Asia Economy Food & Drinks India News

India Restricts Rice Exports to the World, Here’s the Reason

India is known as the world’s largest rice export champion in the last 10 years. Previously, due to poor harvests and production from year to year, India became a rice importer for most of the 1960s and early 1970s.

Then, at the end of 1970, India had achieved self-sufficiency in rice and in the early 2000s it had become a country that diligently exported rice. Since 2010, rice production in India has increased by 40% or more than 40 million tonnes, to a total of 136 million tonnes.

This makes India the second largest rice producer after China, which amounts to 146 million tons. Finally, India’s exports in the same period increased by 20 million tons.

In fact, rice is one of the most widely consumed staple foods in the world and contributes to large calorie consumption in many countries, especially in South and Southeast Asia and in several countries in Africa.

For example, in Asia, the portion of rice consumption in total daily calorie intake in several of the largest consuming countries includes Bangladesh, Bhutan, Cambodia, Indonesia, Myanmar, Nepal, Thailand, the Philippines and Sri Lanka. 

The intake ranges from 40% to 67%, according to the UN Food and Agriculture Organization. Additionally, many of these countries including Bangladesh, Bhutan, China, Sri Lanka, and Nepal import most of their rice from India.

The reason India stopped exporting rice

On July 20 2023, India announced that it would limit non-basmati rice exports to bring domestic rice prices back to stability. Rice prices in India have previously increased by more than 30% since October 2022. The restrictions also halted wheat sales abroad and are estimated to account for around 75%-80% of India’s rice exports.

The restrictions are a blow to the global rice market, whose prices have risen by 15%-20% since September 2022. This comes after a period of relative stability in early 2022, even as prices of other cereals have soared due to falling rice prices due to the Russian-Ukrainian war. . 

Over the past 15 years, India has become the world’s largest rice exporter. India already accounts for 40% of global rice exports in the year to 2023, so the restrictive measures implemented will have a major impact on the global rice market.

India’s current step is to increase restrictions on rice exports which were previously more limited. 

In 2022, India implemented a ban on exports of broken rice and imposed an additional tariff of 20% on non-basmati rice exports. However, India’s rice exports still reached a record high, namely 22.3 million metric tons.

India’s restrictions will likely cause that figure to decline, risking higher global prices and potentially causing food shortages.

Based on IFPRI data, it shows that India often implements export control measures during major price increases on the global market. During the food price crisis in 2007-2008 and 2010-2011, India banned rice exports, mostly non-basmati rice, for long periods. 

When global markets were disrupted by Russia’s invasion of Ukraine starting in February 2022, India initially imposed restrictions on wheat exports, fearing domestic inflation and increasing demand for imports from around the world. 

Apart from that, India also limits exports of broken rice to 5% and a 20% export levy on unmilled and peeled rice. This is likely to continue until this year. 

Apart from that, India is also anticipating the occurrence of El Nino. El Nino certainly reduces rice production in India and other countries in South and Southeast Asia. Then, normal rice yields would significantly reduce pressure on India to maintain export bans to meet domestic needs. 

However, poor rice yields in India and other major exporters such as Thailand and Vietnam could reduce world market supply, thus strengthening the rationale behind the restrictions. 

Impact of Indian regulations

The wheat export ban imposed by India in 2022 triggered a spike in global wheat prices. India’s wheat exports in 2022 reached a record high, although volumes declined sharply at the end of the year.

If India continues to allow the sale of non-basmati rice to neighboring countries, or if the ban on such rice exports is only temporary, then the impact on the market may be limited. However, strict restrictions or even a ban could have a big impact on countries that currently depend on rice imports from India.

Source : Tempo.co