Will the world go hungry because of the ban on rice export in India?

White Rice export ban in India and the reason behind its price rise.

YouTurn EditorialJuly 24, 2023

5,996 4 minutes read

India is the world’s largest producer of white rice(non-basmati rice), basmati rice(our famous biryani rice), par-boiled rice and broken rice. It not only produces but also exports all the above varieties to more than 140 countries worldwide.

Rice is the staple food among the world’s population. Being, the world’s largest exporter, India banned broken rice exports and placed a 20% export tax in September 2022 stating that it monitors the rising retail prices and encourages the domestic supply.

The Ministry of Consumer Affairs said that the ban would help ensure “adequate availability” of non-basmati white rice in the country, along with the aim to “allay the rise in prices in the domestic market.”

The domestic prices of Rice are on an increasing trend. The retail prices have increased by 11.5% over a year and 3% over the past month.

Export duty of 20% on non-basmati white rice was imposed on 08.09.2022 to lower the price as well ensure availability in the domestic market. However, the export of this variety increased from 33.66 LMT (Sept-March 2021-22) to 42.12 LMT (Sept-March 2022-23) even after imposition of 20% export duty. In the current FY 2023-24 (April-June), about 15.54 LMT of this variety of rice was exported against only 11.55 LMT during FY 2022-23 (April-June), i.e. an increase by 35%. This sharp increase in exports can be ascribed to high international prices due to geo-political scenario, El Nino sentiments and extreme climatic conditions in other rice producing countries, etc.

Non-Basmati White Rice constitutes about 25% of total rice exported from the country. The prohibition on export of Non-Basmati White Rice will lead to lowering of prices for the consumers in the country.

Read the above government statement here

Meanwhile, when the Food and Consumer Affairs Ministry of India announced the white rice ban export on July 20, with immediate effect people started to panic and go frenzy.

https://twitter.com/thinkinhashtag/status/1682540691430187008?s=46&t=kIszbQH_arRSG8kPbuGeZw

A lot of videos surfaced the social media, where you can see people rushing & standing in queues stocking the RICE in American stores.

Why did India ban the export of Rice and the major reasons behind this sudden move?

India accounts for more than 40 % of the global rice trade. It has done 55.4 million metric tons in the last year 2022 alone. Benin, Bangladesh, Angola, Cameroon, Djibouti, Guinea, Ivory Coast, Kenya and Nepal are the main buyers of white rice. Iran, Iraq and Saudi Arabia mainly buy premium basmati rice from India.

In this case, this sudden advisory of India, which has exported rice at the lowest prices in the world, has now threatened the world, as various countries are already facing an economic crisis due to drought, floods and the Russia-Ukraine war.

According to the reports published in a poll by Fitch Solutions, by London’s researcher of agricultural commodities, Charles Hart, the scarcity of rice worldwide is relatively high compared to the last 20 years.

And the shortage of rice for June 2023 (Rice Inflation) has increased from 6 % last year, to 12 %, and it will still increase in the coming months as predicted by the economists.

The weather also had an impact and played an important factor in this ban. Torrential rains and floods in northern India have devastated large regions of agricultural lands where the crops are destroyed especially the paddy fields.

The government’s decision to introduce the ban comes as it faces humongous pressure and criticism over inflation on various household items, including the spiralling food prices.