India’s export ban pushes global rice prices to nearly 12-year high
The United Nations’ Food and Agriculture Organization’s All-Rice Price Index (with a base year value of 100 for 2014-2016) rose to reach 129.7 points in July 2023, up 19.6 per cent from its level a year ago and the highest since September 2011.
The year-on-year increase was even higher, at 24.4 per cent, for Indica Index (the rice varieties that are grown in the subcontinent) that touched 135.4 points in July.
On July 20, India prohibited exports of all non-basmati white rice, which accounted for 9.94 million tonnes (mt) out of the total 22.35 mt of the cereal shipped out from the country in 2022-23 (April-March). Currently, only exports of basmati (4.56 mt in 2022-23) and parboiled non-basmati rice (7.85 mt) are being allowed.
Rice, unlike wheat, is a thinly traded global commodity. The total annual world trade in wheat is 214-215 mt. India’s share in it has been miniscule, even when it peaked at 7.24 mt in 2021-22. The ban on wheat exports by India, in May 2022, did affect international price sentiment then, but was not materially significant.
This has not been the case with rice, where the total global trade itself was just 55.65 mt in 2022-23, as per US Department of Agriculture. At 22.5 mt or 40.4 per cent, India’s share in that is significant, both materially and from a price sentiment standpoint.
The other major rice exporting countries in 2022-23 were Thailand (8.5 mt), Vietnam (7.5 mt) and Pakistan (3.6 mt). None can, individually or jointly, fill the 9.9 mt-plus void left by India.
India’s decision to partially ban rice exports came in the wake of stocks in government godowns (inclusive of wheat) as on July 1 falling to a five-year low for that date. That – along with annual retail cereal inflation hitting 12.7 per cent in June and fears of El Niño hitting this year’s rice and wheat production — has promoted the government’s actions ahead of elections due in April-May 2024.
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