NEW DELHI (Reuters) – The world’s largest rice exporter said on Thursday that India had banned exports of non-basmati white rice with immediate effect, in a move that one export group said could have a similar effect to Ukraine. War over wheat supplies.
The government said it imposed the ban after retail prices of rice rose 3% in one month as late monsoon rains damaged crops. While the late monsoon caused a significant lack of precipitation until mid-June, heavy rains since then have caused severe damage.
India accounts for more than 40% of global rice exports, but low stocks mean any cut in shipments will push up food prices due to Russia’s invasion of Ukraine last year and erratic weather.
“In order to ensure sufficient availability of non-basmati white rice in the Indian market and mitigate price hikes in the domestic market, the Government of India has amended its export policy,” the government said in a statement. Up 11.5% in 12 months.
The move shows the sensitivity of Prime Minister Narendra Modi’s government towards food price inflation around the time of next year’s general elections.
His administration expanded a ban on wheat exports after curbing rice shipments in September 2022. It also halted sugar exports this year as sugarcane yields plummeted.
“India will disrupt the global rice market much more quickly than Ukraine did in the wheat market by invading Russia,” PV Krishna Rao, president of the Rice Exporters Association, told Reuters.
Rice is a staple food for more than 3 billion people, and nearly 90% of the water-intensive crops are grown in Asia, where an El Niño weather pattern typically results in lower rainfall. Global prices are already hovering at an 11-year high.
“The sudden ban on exports will be very painful for buyers who cannot replace shipments from any other country,” Rao said.
Although there are not enough stocks in Thailand and Vietnam to fill the shortfall, African buyers will be the hardest hit by India’s decision, Rao said, adding that many countries will urge New Delhi to resume shipments.
Weather damage
Heavy rains in northern parts of India over the past few weeks have damaged newly sown crops in states including Punjab and Haryana, and many farmers have been forced to replant.
Rice fields in northern states have been flooded for more than a week, destroying newly planted seedlings, and forcing farmers to wait for the waters to recede so they can replant them.
In other major rice-growing states including West Bengal, Bihar, Chhattisgarh, Andhra Pradesh and Telangana, farmers have prepared rice nurseries but have not been able to plant seedlings due to insufficient rainfall.
The area under rice was expected to increase after New Delhi raised the purchase price of rice, but industry officials now estimate a marginal decrease. So far, farmers have cultivated rice fields in 6% less area than in 2022.
This week, prices of rice exported from Vietnam, the world’s third-biggest exporter after India and Thailand, rose to their highest levels in more than a decade on mounting supply concerns due to El Nino.
5% broken rice was offered in Vietnam at $515 to $525 per metric ton – the highest level since 2011. India’s 5% broken variety is hovering near a five-year peak at $421 – $428 per metric ton.
Buyers may move to Thailand and Vietnam, but 5% broken rice could cost $600 a metric ton, a European trader said.
Another European trader said that China and the Philippines, which generally buy Vietnamese and Thai rice, would have to pay much higher prices.
Additional reporting by Michael Hogan in Hamburg. Editing by Jan Harvey, David Evans, and Connor Humphreys
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