With India halting its largest rice export category to “allay the rise in prices in the domestic market”, IMF chief economist Pierre-Olivier Gourinchas said India’s restrictions might exacerbate volatility in global food prices.
"In the current environment, these types of restrictions are likely to exacerbate volatility on food prices in the rest of the world, and they can also lead to retaliatory measures. So, they are certainly something that we would encourage the removal of these types of export restrictions because they can be harmful globally," Gourinchas said.
India banned the export of non-basmati white rice on July 20 in a bid to keep retail prices under check. However, this could have an impact on global inflation as food prices are already soaring since Russia invaded Ukraine in February 2022.
India accounts for more than 40 per cent of global rice exports and non-basmati white rice constitutes about 25 per cent of total rice exported from the country. Non-basmati white and broken rice accounted for around 10 million tonnes of a total of 22 million tonnes of Indian rice exports in 2022, reported Reuters.
"India would disrupt the global rice market with far greater velocity than Ukraine did in the wheat market with Russia's invasion," B.V. Krishna Rao, president of the Rice Exporters Association, told Reuters last week. "The sudden ban on exports would be very painful for the buyers, who can't replace the shipments from any other country.”
The impact abroad
Major buyers of India’s non-basmati rice include Benin, Bangladesh, Angola, Cameroon, Djibouti, Guinea, Ivory Coast, Kenya and Nepal while countries like Iran, Iraq and Saudi Arabia mainly import the premium-grade basmati variety.
Cities with a sizeable Indian diaspora are reportedly the most affected in the US because of the rice export ban. Maryland-based big-box warehouse Sapna Foods, which caters to over a hundred retail stores and restaurants in Washington, D.C., Maryland and Virginia, has seen huge demand from neighbouring New Jersey and other states.
Baltimore wholesaler Tarun Sardana told ANI, “We have been getting a lot of extra calls for specific rice — the Sona Masoori. The demand on the weekend was even more. By Monday morning, everybody was just trying to source as much south Indian rice as possible from warehouses such as ours.”
Though the premium-grade basmati rice is not included in the export ban, customers are buying up whatever grain they can, whether basmati or the banned varieties, he said.
Veena Mehrotra, a restaurateur in the Washington metropolitan area, claimed that basmati supply could be hit in the coming days. “The government did not move to ban exports of basmati rice as it is a more premium product. Local concern is on the other staple varieties such as Sona Masoori, which is why the government used the dramatic step of halting exports. Bans are easy to explain to the public. We're not selling food abroad but are catering to the needs of consumers back home. This always works, especially before elections,” she told ANI.
