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What will be the impact of India’s rice-export ban?

The country’s decision to take 10m tonnes of rice off the global export market in an attempt to curb domestic inflation has raised fears of shortages and further increases in food prices around the world.

In early July, after extreme rainfall wiped out paddy fields in India, government officials banned the export of non-basmati white rice to pre-emptively ‘ensure adequate domestic availability at reasonable prices.’

Rice prices in India have risen by 11.5 per cent over the past year and three per cent over the past month, reflecting a 35 per cent year-on-year surge in export volumes between April and June.

It’s been contending with these surges in recent weeks after a heavier-than-average monsoon season caused significant damage to crops and disrupted transport, which experts say shows the impact of the El Niño phenomenon.

Rice paddy fields in northern states have been submerged for over a week, destroying newly planted seedlings, and forcing farmers to wait for waters to recede so they can replant.

In other major rice-growing states, farmers have prepared paddy nurseries, but have been unable to transplant the seedlings due to inadequate rainfall.

‘It’s important to understand the implications that an El Nino pattern can have on Asian rice production,’ said Rob Hatchett, a senior economist at S&P Global Commodity Insights.

‘Certainly, within India, we have seen erratic precipitation levels from the Indian monsoon, which I think has brought up some supply concerns in and of itself.’

Coming just days after wheat and corn prices were sent skyrocketing by Russia’s termination of a key grain deal, the move has raised fears of further global food inflation – with India the world’s top rice exporter, accounting for some 40 per cent of international trade in the cereal – as well as shortages worldwide.

The latter has already taken effect in the West, where reports of panic buying and empty shelves at grocery stores have been rife.

‘I visited almost 10 plus stores,’ one member of the frenzy was quoted as saying by Asian News International. ‘I started looking for a bag of Sona Massori at 9am and it wasn’t until 4.00pm that I could finally lay my hands on a bag of rice at triple its usual price.’

According to rice traders, these regions won’t be the hardest hit, however, given that more than three billion people rely on rice as a staple.

In 2022, India shipped 22m tonnes of it to more than 140 countries.

Around half of those shipments were of non-basmati rice, which are cheaper and especially popular in poor places such as Bangladesh, Nepal, and parts of sub-Saharan Africa.

A reduction in the supply of those types will drive up the prices these countries pay and they’ll be compelled to reduce the quantity of food they consume, switch to non-nutritional alternatives, or cut expenses in other basic necessities like housing.

Consequently, production shortfalls could have huge implications globally on food availability, affordability, and malnutrition.

This will only be exacerbated by the breakdown of the Black Sea trade deal between Russia and Ukraine, which will help push the Horn of Africa close to famine.

‘Countries are already dealing with back-breaking food inflation, particularly poor countries,’ said Arif Husain, chief economist at the UN World Food Programme.

‘When you’re especially dependent on food imports and your debt burden is severe, your currency is depreciating and interest rates are rising. If you’re a poor country who imports your food or fertiliser, you’re in trouble.’