India, by far, is the largest exporter of rice in the world. It accounts for 40 percent of the rice trade globally. Keeping in mind these, any disruptions in supply of rice from India would significantly affect the global rice market. Now, the world’s top rice shipper is planning to restrain the exports of rice. Such a move by India has the potential to largely disrupt the global agri-commodities market and worsen the hunger crisis, thereby affecting the billions of people around the world who depend on this commodity.
There’s a Catch to it
The news that the largest exporter of rice is planning to restrict rice exports rumbled the global market. However, they missed out on a little detail- the government of India is only discussing bans of ‘broken-rice’ export. The broken rice’s outbound shipments accounts only for 20 percent of the total rice exports. This however in no sense means that such a move will not cause trouble for the global market but the impact will be less in comparison to India’s complete ban on rice exports. India Seeks to Avoid Panic With Targeted Rice Export Curb
It is to be noted that India has, in the past (2007-08) curbed the exports of non-Basmati rice, which resulted in other major producers like Vietnam doing the same. This led to panic hoarding and prices touched $1000 a ton which is more than double the price right now. However, India’s restriction on broken rice is unlikely to repeat the 2007-08 food crisis. Peter Timmer, an expert on Asian governments suggested that India is currently acting in a very responsible way and this would lead to limited foreign criticism.
The agri-commodities have seen a major price rise this year and India has responded to it in its way by limiting exports of sugar, wheat, and now maybe rice. When the Russian invasion of Ukraine disturbed the global market, Prime Minister Narendra Modi declared that India is ready to feed the world, but it had to change its course by curbing wheat and sugar supplies amid shortages in its own reserves. This however led to criticism from G7 nations who asserted that such moves result in worsening the food crisis.
India Balancing it Out
If India goes ahead with the curbs on broken rice, it will affect about a fifth of India’s Buy Bulk Rice. This variety of rice is mainly imported by China to feed livestock and some developing African countries import it as well owing to its low price. So, these restrictions may affect a few countries but it is very unlikely that they will cause a colossal crisis in the global market. Notably, India is trying to strike the balance between domestic requirements and exports. India’s rice output faced a decline due to a lack of rain and it led to a drop of percent in plantations. India Seeks to Avoid Panic With Targeted Rice Export Curb
Conclusion
With spiraling prices of agri-commodities in the global market and the market’s dependency on India’s rice output, India’s actions make it evident that it seeks to avoid panic in the global market. Though it is unclear whether the Government of India will go ahead with the bans, one thing is for sure and that is- it is critical for India to take steps to prevent a surge of prices in the local market and ensure a seamless supply of grains.
