The world will hurt

India's decision to restrict rice exports could worsen global food inflation

In May this year, India banned wheat exports to tackle rising prices in the domestic market.
Brewing trouble. 
Brewing trouble. 
Image: Reuters (Reuters)
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India has banned rice exports, fuelling fears of a flare-up in international food prices.

The Food and Agricultural Organisation’s food price index (FFPI) averaged 138 points in August 2022, 10.1 points (7.9%) above its value a year ago. It has consistently stayed over 125 points through 2021 and 2022, peaking at 159.7 in March this year.

Russia’s invasion of Ukraine, along with draughts and heat waves, has fueled food inflation in several parts of the world over the past year or more.

Supplies from India, a country that, too, has been battling erratic weather and has been battling domestic inflation, are a key component of global food management.

India, the world’s largest exporter of grains, accounts for up to 40% of global rice shipments.

“India broke into the top 10 list of agricultural produce exporters in 2019 with a sizeable share in the export of rice, cotton, soya beans and meat, according to a World Trade Organization (WTO) report on the trends in world agricultural trade in the past 25 years,” Mint reported in July 2021.

India’s ban aimed at local inflation

The Indian government yesterday (Sept. 8) decided to ban exporting broken rice and imposed a 20% duty on exports of various grades of rice. Basmati and parboiled rice have, however, been excluded from the export duty.

The decision is aimed at keeping local prices low amid a below-average monsoon that curtailed rice planting. In May this year, India banned wheat exports to calm down domestic inflation.

The world will now have to look at Vietnam and Thailand, two countries already under pressure for international shipment of rice, to meet its needs. Other nations in this category are Pakistan (now badly flood-hit) and Myanmar.