India Rice Export Ban Puts Market On Edge For Copycat Curbs
The global market is on alert following India’s decision to ban rice exports, raising concerns of similar moves by other suppliers to prevent domestic shortages and address the 10 million metric tonne gap left by India’s absence. This situation is intensifying worries about already elevated global food inflation.
These restrictions imposed by India closely resemble those it enforced in 2007 and 2008, which sparked a chain reaction as various nations curtailed exports to ensure local food security.
The potential impact of these actions on supplies and prices is greater this time around, as India now constitutes over 40% of global rice trade, a significant increase from its 22% share fifteen years ago. Consequently, the pressure is mounting on other rice-exporting countries such as Thailand and Vietnam to follow suit.
The swift effect on prices has led to a 15-year high, driven by India’s unexpected ban on non-basmati white rice sales to curb price hikes.
The risk of limited supplies could lead to further rice price spikes and exacerbate global food inflation, impacting vulnerable consumers in Asia and Africa.
This challenge compounds the existing issue of tight supplies caused by erratic weather and disruptions in Black Sea shipments.
Rice exporters like Thailand, Vietnam, and Pakistan are striving to meet rising demand following India’s ban, yet they are constrained by limited surplus capacity for exports.
Thailand, Vietnam, and Pakistan, respectively ranking second, third, and fourth in global rice exports, are eager to enhance sales while ensuring domestic consumers are not adversely affected.
Despite the desire to fulfill increased demand, these countries are constrained by limited surplus capacities, with estimates suggesting that they cannot raise exports by more than 3 million metric tonnes annually to meet local needs.
The Philippines, China, Senegal, Nigeria, South Africa, Malaysia, Cote d’Ivoire, and Bangladesh are among the leading importers of non-basmati rice.
The rise in global prices since India’s ban, around 20%, raises concerns that a further 15% increase could trigger restrictions by Thailand and Vietnam.
As rice is a staple for more than 3 billion people, and the majority of it is produced in Asia, the impact of climate factors like El Nino on crops is significant.
Erratic monsoon patterns in various countries, including India and Thailand, have raised concerns about crop yields.
Thailand has already advised farmers to reduce the area under the second rice crop due to below-normal rainfall, and in India, unpredictable monsoons have led to flooding in some regions and insufficient rainfall in others.
The situation underscores the interconnectedness of global food systems and the potential for supply disruptions to ripple across various nations.