Home Headlines Potential global food crisis looms amid India’s rice export ban

Potential global food crisis looms amid India’s rice export ban

by Sofia Navarro
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What transpires when a key food staple, essential to billions worldwide, is suddenly embargoed by India? On July 20th, India enforced an export prohibition on non-basmati white rice in a bid to curb surging domestic prices. This decision was swiftly followed by scenes of panic buying and bare rice shelves in Indian grocery stores across the US and Canada, inevitably leading to a price hike.

Rice, with its numerous varieties, plays a vital role in global sustenance. Four primary groups of rice are traded internationally: the lengthy, slender grain Indica rice commands the majority of global trade, followed by fragrant basmati, the short-grained Japonica used in sushi and risottos, and glutinous or sticky rice, cherished for desserts.

As the globe’s leading rice exporter, India contributes to around 40% of the world’s cereal trade, joining the ranks of other key exporters including Thailand, Vietnam, Pakistan, and the US. Notable rice importers comprise China, the Philippines, and Nigeria, with Indonesia and Bangladesh stepping up imports during local supply shortages. Rice consumption is steadily growing across Africa, acting as a primary energy source in countries like Cuba and Panama.

Last year, India exported a substantial 22 million tonnes of rice to 140 nations. Among this, six million tonnes accounted for the comparatively economical Indica white rice, with the estimated global rice trade volume being 56 million tonnes.

Indica white rice dominates approximately 70% of global trade, and India’s export has now ceased. This additional restriction follows last year’s ban on broken rice exports and the imposition of a 20% tariff on non-basmati rice exports.

Unsurprisingly, concerns have arisen about the potential surge in global rice prices as a result of July’s export embargo. Pierre-Olivier Gourinchas, Chief Economist of the IMF, predicts that the ban could elevate prices, resulting in a potential 15% increase in global grain prices this year.

Furthermore, India’s export suspension comes at an inopportune juncture, says Shirley Mustafa, a rice market analyst at the UN’s Food and Agriculture Organisation (FAO). Global rice prices have been steadily on the rise since early 2022, experiencing a 14% uptick since the prior June. Additionally, the new crop’s arrival in markets is still approximately three months away, and strained supplies are anticipated due to adverse weather conditions in South Asia and escalating costs of rice cultivation.

India currently holds an astonishing stockpile of 41 million tonnes of rice, over three times the required buffer amount, intended for its strategic reserve and the Public Distribution System (PDS), a program that provides over 700 million impoverished individuals with access to affordable food.

Over the past year, India has grappled with persistent food inflation, witnessing a more than 30% surge in domestic rice prices since October. This has fueled political pressures on the government, especially in the run-up to general elections. The escalating cost of living poses a formidable challenge amid numerous state-level elections in the coming months.

Many believe that India should steer clear of rice export bans as they threaten global food security. Over 50% of rice imports in roughly 42 countries stem from India, with the nation’s market share in African rice imports exceeding 80%, according to the International Food Policy Research Institute (IFPRI).

While export restrictions on food aren’t novel, India’s current export ban carries elevated risks. It is likely to result in “a spike in global prices of white rice” and adversely impact the food security of numerous African nations, warn experts from the Indian Council for Research on International Economic Relations (ICRIER). In order to maintain its role as a responsible leader within the Global South in the G-20, India should seek to avoid such sudden bans. Yet, the most damaging consequence might be India’s perception as an unreliable rice supplier on the global stage.

TYT Newsroom

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