India’s Rice Export Ban to Further Strain Global Food Supplies
India banned exports of broken rice and levied a tax on other key varieties in a move that would add to global inflationary pressure and exacerbate food supply pains caused by the war in Ukraine.
Late Thursday, India’s Directorate of Foreign Trade issued the ban, which came into effect Friday.
New Delhi also imposed a 20% export duty on overseas shipments of white and brown rice, which make up about 60% of India’s total global sales. Parboiled and basmati rice are excluded from the ban, the notice said.
Global buyers are depending on India—the world’s top rice exporter—to shore up food supplies since Russia invaded Ukraine, a major wheat grower, which roiled global food markets. The United Nations has warned the world faces potential food shortages. India accounts for more than 40% of the global rice trade, according to some local exporters.
India is a crucial supplier of broken rice—a cheaper grade—to some African countries that use it as a staple food. China is also a top buyer of India’s broken rice, using it for animal feed as well as to make noodles and wine.
Some broken rice exports will be permitted until Sep. 15 in cases where loading started before the ban order and consignments had already been handed over to customs.
The rice export ban and new duties mark the third major move by India to restrict food exports, driven by worries about shrinking supplies and inflation. In May, India restricted exports of wheat and sugar due to concerns about production being hit by scorching heat waves in various parts of the country after India suffered through its hottest March and April in more than 100 years.
Following that, insufficient monsoon rainfall in June and erratic rains in July and August in the key growing states of Uttar Pradesh, West Bengal and Bihar curtailed rice planting by 13% to more than 23.1 million hectares from 26.7 million hectares a year earlier, according to India’s agriculture ministry.
Lower rice plantings could lead to lower production this year but the situation would become more clear when harvesting begins in October, said Vinod Kaul, senior executive director at the All India Rice Exporters Association, which is based in New Delhi.
“Safeguarding supplies is definitely on the government’s mind,” he said.
India’s decision to shut down exports of broken rice will cost it market share, Mr. Kaul said, as countries that are wrestling with dwindling supplies to feed their populations could shift to Vietnam and Thailand, the second and third-largest rice exporters.
“The ban will terribly impact India’s position in the world market,” he said.
India exported about 3.8 million metric tons of broken rice globally in its last financial year, which ended in March, or about a fifth of its overall non-basmati rice exports. From April to June, exports of this cheaper commodity stood at 1.4 million tons, or about a third of non-basmati exports.
With the current restrictions, exports will drop almost 50% to about 2 million tons, Mr. Kaul added.
For now, there are ample rice stocks in government warehouses, although lower wheat procurement has already prompted a higher distribution of rice under the state-run free food and grain program.