India's curbs on rice exports may lead to a global surge in prices

21 Oct 2022 , 02:55 PM

After more than a decade of stability, India’s recent restrictions on rice exports might spark a surge in world prices, according to news reports. New Delhi’s protectionist stance coincides with declining supply in other key countries and rising worldwide demand.

Rice growing in India was hampered by uneven monsoon rainfall, which led to export limitations in September. Floods also reduced Pakistan’s output, despite rising consumption in major importers like Bangladesh and the Philippines. Because of this, experts predict that in 2022—2023, worldwide demand will exceed global output.

This is bad news for the Asian and African nations that depend on rice imports for up to 60% of their needs.

Global rice prices have increased by more than 10% since India, the largest producer of rice in the world, banned the export of broken rice and imposed a 20% export tariff on several non-basmati kinds. The worldwide rice price index for the Food and Agriculture Organization increased 2.2% last month to reach an 18-month high.

After COVID-19’s production and supply chain disruptions left governments throughout the world scrambling to control food inflation, Russia’s invasion of Ukraine withdrew millions of tonnes of food from the world’s markets, setting a record for inflation earlier this year.

Nevertheless, before India’s export restrictions went into effect a few months ago, business and government leaders in Asia predicted that rice prices would remain stable because of adequate supplies.

Since neither Russia nor Ukraine is a major producer of rice, it was spared from the conflict. Additionally, despite the COVID-related disruptions for other goods, rice supplies remained largely stable.

Top exporters Thailand and Vietnam currently have insufficient stockpiles to offset India’s export restrictions and extensive output losses. Three international traders predicted that citing their own internal analyses, global rice inventories might reach their lowest level in at least five years in 2023.

According to government statistics, Vietnam’s unmilled rice production is expected to remain constant at 43 million tonnes from the previous year.

Anucha Burapachaisri, a government spokesperson, stated to ET that Thailand wants to export 7.5 million tonnes this year, an increase of nearly 7% from its previous goal of 7 million tonnes.

Similar to India, other Asian producers including China, Bangladesh, and the Philippines experienced adverse climatological conditions like drought, flooding, typhoons, and cyclones.

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