Thu. Feb 29th, 2024

India’s recent decision to halt exports of non-basmati white rice in an effort to control domestic inflation has sparked apprehensions of potential worldwide food price escalations. This move follows closely after Russia’s cancellation of a crucial grain deal, which had already driven up wheat and corn prices.

The sudden ban on non-basmati rice exports, enacted due to adverse weather conditions affecting domestic crops, comes on the heels of a failed attempt in September to curb foreign demand through a 20% export duty. This demand surge had been exacerbated by extreme climate events affecting crop production in various countries.

As the largest global rice exporter, accounting for over 40% of international shipments, India’s ban primarily targets non-basmati white rice, constituting approximately a quarter of its total rice exports. The past year witnessed a 35% increase in international sales of Indian rice, contributing to a 3% surge in domestic prices within the last month alone. According to the Ministry of Consumer Affairs, Food, and Public Distribution, rice prices in India have risen by 11.5% compared to the previous year.

The Indian government’s rationale behind the ban, implemented on a Thursday evening, is to “ensure sufficient availability of non-basmati white rice in the Indian market,” ultimately leading to lower prices for domestic consumers. Escalating food inflation has placed significant pressure on the ruling BJP government in Delhi, particularly in light of upcoming national and state-level elections.

India’s decision has had a ripple effect on rice prices across Asia, with several countries experiencing price increases in the global market. Rice prices from other Asian nations are also anticipated to witness substantial hikes in the coming days.

Even before the ban, India’s 5% broken parboiled rice variety had been teetering close to a five-year high, trading between $421 and $428 (£328-334) per metric tonne. Thailand and Vietnam, respectively the world’s second and third-largest rice exporters, have similarly observed recent price hikes in their 5% broken rice varieties. Prior to the ban, Vietnam’s rice prices had already reached their highest levels since 2011 and have continued to rise. Meanwhile, Thailand’s rice prices surged to levels not witnessed in over two years.

The global food supply has also been strained by Russia’s involvement in Ukraine, contributing to elevated commodity and grain prices on a global scale.

By admin

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