India may ban rice exports

The world’s largest rice exporter is considering tightening sales to lower domestic prices, although this could push up global prices.

Bloomberg quoted sources close to the Indian government as discussing a plan to ban the export of all non-Basmati rice (a popular rice in South Asia). The reason is that domestic rice prices have increased and they want to control inflation. Retail rice prices in Delhi have increased by 15% this year, while the national average price has increased by 8%, according to data from India’s Food Ministry.

If implemented, the ban would affect 80% of India’s rice exports. This move may cool down domestic prices, but will push up global rice prices. Rice is a staple food for half of the world’s population. In which, Asia consumes 90% of the global supply. Rice prices in this area have reached a 2-year high due to concerns that El Nino appears to affect crops.

Last month, India’s consumer price index (CPI) accelerated, mainly due to high food prices. India’s inflation is expected to continue rising as the price of tomatoes – a staple in the country – has increased by 341% this year, according to data from the Ministry of Consumer Affairs.

India currently contributes about 40% of the global rice business. Last year, they banned the export of broken rice and imposed a 20% tax on white and brown rice, as the Russia-Ukraine conflict pushed up prices of staple foods like corn and wheat. They also restrict exports of sugar and wheat.

India supplies rice to more than 100 countries. China, Senegal and Ivory Coast are their biggest customers. After the news, shares of India’s largest rice exporters all dropped today. The current reduction is around 2-4%.

Importing countries such as Indonesia, China and the Philippines are accelerating their rice hoarding. The World Meteorological Organization (WMO) said El Nino has developed in the tropical Pacific for the first time in seven years, causing drought in many rice-growing areas. India’s ban will exacerbate supply concerns.

 

According to Bloomberg.