India’s Rice Export Curbs To End A Decade Of Price Stability, Trigger Rise In Global Prices
India-a country located in South Asia is of huge significance, particularly in the global rice market. The Asian nation is the largest rice exporter in the world and ranks second behind Brazil in terms of rice production. It holds a substantial share of 40% in the global rice trade and more than 150 countries around the world depend upon it for their domestic rice needs.
Favorable climatic conditions, help the Asian nation produce adequate quantities of the staple and hold on to its top spot in terms of rice exports. However, 2022 has been a little strange in this regard. While several parts of the country witnessed record-breaking rainfall, the eastern states of India like Bihar, West Bengal, and Uttar Pradesh that has a huge area under rice cultivation witnessed scanty rainfall. Owing to uneven monsoon rains, the largest Rice Exporter imposed a complete ban on exports of broken rice and slapped a 20% duty on exports of all varieties of non-basmati rice except parboiled rice.
While the decision might be justified in light of domestic needs amid low rice output, the time at which the decision has come has made experts fear of a rise in prices of rice in the global markets.
India’s Rice Export Curbs Add To The Woes
While governments around the world have already been struggling to rein in runaway food inflation caused by the Covid-19 disruptions, the Russian invasion of Ukraine further led to global grain shortage and fueled food prices pushing several nations on the brink of a severe food crisis.
On top of it, adverse weather conditions in different parts of the world intensified the issue. Owing to scanty monsoon rainfall in the rice growing states of India that led to low domestic output, the largest rice exporter in the world imposed a complete ban on exports of broken rice and slapped a 20% duty on exports of all varieties of non-basmati rice except parboiled rice.
Surprisingly, the GOI’s move comes at a time when its neighbor, Pakistan witnesses a low rice output in the aftermath of devastating floods.
Other top rice exporters like Thailand and Vietnam also lacks sufficient inventories to fill up the void amid widespread low rice output. All this presents a grim situation, as there remains various issues on the supply front while the demand for rice goes on becoming strong from the top rice importers in the world like Bangladesh and the Philippines.
The Bottom Line
Owing to low monsoon rainfall, India-the largest rice exporter imposed several restrictions on rice exports and since it holds a 40% share in the global rice trade, it is difficult for other top exporting nations to fill the void. Further, low rice output in other rice exporting nations like Pakistan, Thailand and Vietnam amidst strong demand from Bangladesh and the Philippines presents a grim picture and owing to these, experts believe that the prices of rice is going to skyrocket in the global market. Analysts are of the opinion that it is not the GOI’s decision that has raised the alarms but the timing as such that could a trigger a rally in the prices of rice in the global markets.
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