In a move that could have significant repercussions on the global food market, India, the world’s largest rice exporter, has decided to ban exports of non-basmati white rice. The ban results in panic buying and prices’ spike in the US and other countries as NRIs (Non-Resident Indians) bought multiple rice bags to prepare for any potential shortages in the coming months. In this context, experts fear that the ban could exacerbate the ongoing issue of food inflation, already exacerbated by other factors like Russia’s targeting of grain ships and erratic weather patterns.
India’s Ministry of Consumer Affairs announced the ban, stating that it intends to lower rice prices in the country and stabilize the domestic market. Rice prices in India have already witnessed an 11.5 per cent increase over the past year and a further 3 per cent rise in the past month. Between April and June, India experienced a 35 per cent year-on-year surge in rice export volumes, making it the dominant player in the global rice market, accounting for approximately 40 per cent of all rice exports.
The ban applies solely to non-basmati white rice, leaving the prized basmati rice unaffected. In September, India had already imposed a 20 per cent duty on exports of unmilled white rice, husked brown rice, semi-milled rice, and wholly milled rice, as an attempt to regulate the rice market. However, the recent ban on non-basmati white rice is expected to have a more significant impact on international rice trade.
The ban has triggered fears among countries that rely on India’s rice exports, such as Thailand and Vietnam. These countries have also experienced price surges in their 5 per cent broken rice varieties. With India’s non-basmati rice out of the picture, they may struggle to fill the gap in supply, further driving up global food prices.
Source: Bloomberg data
In India’s overseas communities, particularly in North America, Europe, and West Asia, the ban has led to panic buying and hoarding of rice. Long queues have been witnessed outside Indian grocery stores, with NRIs (Non-Resident Indians) buying multiple rice bags to prepare for any potential shortages in the coming months. The fear of scarcity has also prompted stores to enforce restrictions on sales, with some allowing only one rice bag per customer.
Adding to the situation, Indians in the US have reportedly been hoarding rice bags in response to the export ban. Grocery stores run by Indians in the US have also seized the opportunity to increase the prices of rice bags, taking advantage of the high demand and limited supply. A 9 kg bag of rice, which used to cost around $15-16, now sells for a staggering $46.99 according to a Business Line report.
The ban on non-basmati rice exports has raised concerns about global food inflation and highlights the importance of diversifying rice sources for countries reliant on Indian rice. The situation remains fluid, with potential implications on the prices and availability of rice worldwide. Governments and consumers alike are closely watching the developments in the rice market as they grapple with the broader challenges posed by food inflation and its impact on vulnerable populations.
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