On Thursday, July 20, 2023, India enacted a ban on the exports of non-basmati white rice with immediate effect, as part of the government’s efforts to control the surge in food prices. The Ministry of Consumer Affairs justified the ban, stating that it would ensure adequate availability of non-basmati white rice within India and help curb the rise in domestic market prices.
As the world’s leading rice exporter, accounting for more than 40% of the global rice trade, and the second-largest producer after China, India’s decision to halt exports could have significant ramifications for the global rice market. Experts warned that this week’s ban could further elevate already inflated prices, compounding the effects of the country’s previous ban on shipments of broken rice in September.
Eve Barre, ASEAN economist at trade credit insurer Coface, noted that the ban would considerably tighten global rice supplies due to India’s status as the world’s second-largest producer of this essential staple food. Bangladesh and Nepal are expected to be hit hardest by the ban, as both countries are top export destinations for Indian rice.
The ban may also heighten food insecurity in countries heavily reliant on rice imports, as predicted by agriculture analytics firm Gro Intelligence in a recent report. Gro Intelligence’s analysts stated that top destinations for Indian rice include Bangladesh, China, Benin, and Nepal, with other African countries also importing significant quantities of Indian rice.
Non-basmati white rice constitutes approximately 25% of India’s rice exports, according to the Ministry of Consumer Affairs, indicating the significant impact the ban could have on global rice supply chains.
Importers affected by the ban may turn to alternative suppliers in the region, such as Thailand and Vietnam, said Radhika Rao, senior economist at DBS Bank. However, this shift in sourcing could exacerbate the already tightening global rice supply, leading to further price increases.
Rice prices have been hovering at decade highs, partly due to tighter supplies after the staple grain emerged as an attractive alternative following Russia’s invasion of Ukraine in February 2022. The situation was further exacerbated when wheat prices surged after Russia’s withdrawal from the Black Sea grain deal, a move that aimed to prevent a global food crisis by allowing Ukraine to continue exporting grains. The combination of these factors has created a challenging environment for food markets worldwide.
As India’s ban on non-basmati white rice exports takes effect, the global rice market braces for potential supply shortages, price volatility, and heightened food insecurity in countries reliant on rice imports. Industry experts are closely monitoring the situation, but the impact of the ban on global food markets remains uncertain, and additional measures may be needed to address the ongoing challenges in the food supply chain.