India Bans Rice Exports, Raising Global Food Security Concerns

NEW DELHI: India, the world's largest rice exporter, has taken immediate action to ban overseas sales of non-basmati white rice. The decision comes as rice prices on international markets have reached decade highs, exacerbated by the challenges posed by the Covid pandemic, the war in Ukraine, and the impact of the El Nino weather phenomenon on production levels.

The Indian government's consumer affairs and food ministry justified the ban by stating its objective to ensure sufficient availability and curb the rise in domestic market prices. Non-basmati white rice accounts for approximately a quarter of India's total rice exports, making the ban a significant disruption in the global rice trade. As India contributes more than 40 percent of all global rice shipments, the ban poses a potential risk of exacerbating food insecurity in countries heavily reliant on rice imports, such as African nations, Turkey, Syria, and Pakistan, which are already grappling with high food-price inflation.

During the second quarter, Indian exports of non-basmati white rice surged by 35 percent year-on-year, despite the government's earlier measures of banning broken rice shipments and imposing a 20 percent export tax on white rice. The situation has been further compounded by the fact that alternative major rice exporters, such as Thailand, Vietnam, Pakistan, and the US, may not have sufficient spare capacity to fill the gap left by India's absence in the market. The recent cancellation of the Black Sea grain deal by Moscow, which had protected Ukrainian exports, has already led to rising wheat prices, further adding to global inflation concerns as rice can be used as a substitute for wheat.

Within India, rice prices saw a substantial increase of 14-15 percent in the year leading up to March. The government's decision to ban non-basmati white rice exports is viewed as a strategic measure to safeguard domestic food security and combat inflation. Rabobank's senior analyst, Oscar Tjakra, emphasized the implications of the ban, indicating that alternative suppliers may not be able to compensate for the shortfall.

India's restriction on rice exports is not an isolated event, as the country had already imposed limitations on wheat and sugar exports in the previous year to manage escalating prices in those sectors as well.

As the world grapples with various challenges, including the ongoing pandemic, geopolitical tensions, and erratic weather patterns, the decision by India, a major player in the global rice market, carries significant ramifications. The ban could potentially strain international rice supplies, leaving many nations vulnerable to food crises and higher inflation rates, amplifying the need for coordinated efforts in addressing global food security concerns.

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