New Delhi: India on Thursday ordered the halting of its biggest rice export batch, cutting shipments by nearly half by the world’s biggest grain exporter, sparking fears of rising inflation in global food markets.
The government said it is banning non-basmati white rice as retail rice prices rose 3% in a month as heavy monsoon rains ravaged crops.
India accounts for more than 40% of world rice exports, and low stocks with other exporters means any cut in shipments could push up food prices already battered by Russia’s invasion of Ukraine last year and erratic weather.
In a statement, the food ministry said, “In order to ensure adequate availability of non-basmati white rice in the Indian market and to reduce price rise in the domestic market, the Government of India has amended the export policy.” 11.5% increase in retail prices in 12 months.
The affected category, non-basmati white and broken rice, accounted for about 10 million tonnes of the total 22 million tonnes of Indian rice exports last year.
The government clarified late Thursday that parboiled rice, which represents 7.4 million tonnes of exports in 2022, is not included in the ban.
The move reflects the sensitivity of Prime Minister Narendra Modi’s government towards food inflation ahead of the general elections almost due next year.
His administration has extended a ban on wheat exports through September 2022 after placing curbs on rice shipments. Sugar exports have also been banned this year due to fall in sugarcane production.
President of Rice Exporters Association B.
Rice is a staple food for more than 3 billion people, and about 90% of the water-intensive crop is grown in Asia, where El Niño weather patterns typically bring little rainfall. Global prices are already hovering at their highest level in 11 years.
“A sudden ban on exports will be very painful for buyers, who cannot substitute shipments from another country,” Rao said.
While Thailand and Vietnam do not have enough reserves to meet the shortfall, African buyers will be most affected by India’s decision, Rao said, adding that many countries will urge New Delhi to resume shipments. Other top buyers of Indian rice include Benin, Senegal, Ivory Coast, Togo, Guinea, Bangladesh and Nepal.
The ban will be effective from July 20, but exports will be allowed to vessels under loading.
weather damage
Heavy rains in the northern parts of India over the past few weeks have damaged newly sown crops in states including Punjab and Haryana, forcing many farmers to replant.
Paddy fields in northern states have been submerged for more than a week, destroying newly planted seedlings, and forcing farmers to wait for water to recede before replanting.
In other major rice-producing states, farmers have prepared paddy nurseries but have not been able to transplant due to insufficient rainfall.
The area under rice cultivation was expected to increase after New Delhi raised the rice purchase price, but farmers have planted rice paddy in 6% less area so far than in 2022.
This week, prices of rice exported from Vietnam, the world’s third-biggest exporter after India and Thailand, rose to the highest level in more than a decade on rising supply concerns due to El Nino.
Vietnam’s 5% broken rice was offered at $515-$525 per metric ton – its highest since 2011. India’s 5% broken rice variety was near a five-year peak at $421-$428 per metric ton.
A European trader said buyers could turn to Thailand and Vietnam, but their 5% broken rice could fetch $600 a metric tonne.
Another European dealer said China and the Philippines, which usually buy Vietnamese and Thai rice, would be forced to pay much higher prices.
(Additional reporting by Michael Hogan in Hamburg; Editing by Jan Harvey, David Evans and Conor Humphreys)
Disclaimer: This report is automatically generated from Reuters news service. ThePrint takes no responsibility for its content.