A day after food inflation spiked, India is considering banning the export of most rice varieties, as reported on Thursday.
This move by India, the world's largest rice exporter with 40% command of the global rice trade, may raise already high global rice prices as the disruptive El Niño weather pattern returns.
Rice Policy Updates
Following Russia's invasion of Ukraine, which drove up the price of staple foods like wheat and corn, India last year banned the export of broken rice and imposed a 20% duty on shipments of white and brown rice. Additionally, exports of wheat and sugar have been regulated by the nation.
According to the report, the Narendra Modi government is currently discussing a plan to prohibit the export of all non-Basmati rice. Authorities also want to avoid the risk of further inflation before the elections, according to the report. The ban, which might apply to 80% of India's rice exports, can lower rice prices domestically but could have an impact on global prices of the commodity.
Reasons For Policy Changes
According to a report from ET earlier this week, uneven rainfall across the main rice-growing regions of the nation has increased rice prices by as much as 20% over the past 10 days. India exports more than 40% of the world's rice, which totaled 56 million tonnes in 2022. However, low inventories mean that any reduction in shipments will increase food prices, which were already high due to the Russian invasion of Ukraine last year and unpredictable weather.
According to B.V. Krishna Rao, president of the Rice Exporters Association (REA), “India was the cheapest supplier of rice.” “As Indian prices increased as a result of the new minimum support price, prices from other suppliers also began to rise.” More than 3 billion people rely on rice as a staple food, and Asia, where the El Nino weather pattern typically results in lower rainfall, produces nearly 90% of the water-intensive crop.
Asia's rice prices have risen to their highest level in more than two years as importers increase their stockpiles out of concern that the arrival of El Niño will dry up plantations and harm crops.
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