Indian ban on rice exports raises food inflation fears

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India has banned exports of non-basmati white rice, raising fears of a spike in global food inflation, as Russia’s targeting of grain ships pushed up wheat and corn prices.

India’s consumer affairs ministry on Thursday said it would ban exports to “reduce prices as well as ensure availability in the domestic market”. According to the ministry, rice prices in India rose 11.5 percent in the past year and 3 percent in the last month, reflecting a 35 percent year-on-year increase in export volumes between April and June.

India is the world’s largest rice exporter, accounting for about 40 percent of global exports. Then there are Thailand and Vietnam, where broken rice prices have also risen 5 percent this year, raising costs for countries hoping to avoid New Delhi’s ban. Analysts say higher prices for cereals – which feed billions of people around the world – are likely to drive up global food inflation.

In September, India imposed a 20 percent duty on exports of unmilled white rice, husked brown rice, semi-milled rice and fully milled rice. Like the latest ban, the duty did not extend to basmati, India’s most famous variety of the grain.

India has been grappling with high food prices in recent weeks after heavy monsoon rains damaged crops and disrupted transport, raising prices of tomatoes and other food items.

“This is an unexpected response, especially given the fact that the government’s rice stock as of July 1 was three times the buffer stock norm,” said Ashok Gulati, professor at the Indian Council for Research on International Economic Relations. “We are in an extremely comfortable position as far as confirmed stocks go.”

Gulati said the move would increase global rice prices and particularly affect countries in Africa. However, he added that the announcement of the ban said that exports could still be allowed to countries that have obtained permission from the Indian government “to meet their food security needs and on the basis of their government’s request”. had applied for.

“It (the export ban) is a big deal because India is an important country for rice production,” said Zanna Aleksahina, grain analyst at commodity research group Mintek. “I expected we would have seen extreme food inflation, but I am concerned that may not be the case.”

Global rice stockpiles are forecast to fall to a six-year low of about 170 million metric tons by the end of the year, Aleksahina said, with extreme weather expected to wreak more havoc in the coming months.

Kona Haque, head of research at agri trading house ED&F Man, said the ban on India’s non-basmati rice exports reflects the impact of El Nino. The tightness in the rice market could have an impact on wheat, he said, because “both of these, both staple foods, could be almost substitutes”.

El Niño refers to a weather pattern that develops in the Pacific Ocean, as currents of warm water drive rainfall toward South America and produce dry conditions in Australia and Asia.

India’s ban comes the same week that Russia began bombing Ukrainian grain silos and pulled out of the Black Sea grain initiative, which has seen more than 30 million tonnes of Ukrainian grain and edible oils exported around the world for the past 11 months. allowed to do. Wheat prices have jumped by 11 per cent in the last five days. Maize has gained about 9 percent.

Russia accounts for about a fifth of the world’s wheat exports, while Ukraine had about a tenth before the war.

“Countries are already grappling with back-breaking food inflation, especially poor countries,” said Arif Hussain, chief economist at the UN World Food Programme. “When you are particularly 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 that imports its food or fertilizer, you’re in trouble.”

The World Trade Organization last year exempted the World Food Program from export restrictions, Hussain said. “If we wanted to buy rice from India, we could still do so.”

Additional reporting by Madeleine Speed ​​in London