People in some of the poorest and hungriest nations in the world may be the hardest hit by India’s decision on July 20 to ban exports of long grain, non-basmati rice — a move that’s already pushing global prices higher and forcing import-dependent countries to scramble to find supplies, according to analysts and trade data.
Countries like Madagascar, Somalia, Bangladesh and Yemen depend on imports of the grain that’s a staple in their peoples’ diet.
Somalia, a country facing food shortages after years of drought and home to 6.6 million people suffering severe food insecurity, consumed 507,000 metric tons of Indian rice last year, according to the United Nations Food and Agriculture Organization.
“The folks that are going to be hurt the most are the poor countries that depend on Indian rice,” Bobby Hanks, chair of the USA Rice Federation’s International Trade Policy Committee, told Agri-Pulse.
India has become the world’s largest rice exporter and the void its export ban has left on the international market is already pushing up international prices. Any country that needs rice, regardless of where that rice comes from, will be paying more.
Prices are spiking in Thailand, Vietnam, Pakistan and Myanmar in response to India’s ban, said Milo Hamilton, senior economist for First Grain.
The average price for Thai rice jumped to $590 per metric ton by July 28, up from $537 on July 19 and $400 at this time a year ago, according to data from Riceonline.com.
“It creates a shortage,” said Isaac Osikani, a rice trader in Ghana and managing director of Blue Ocean Links. He added that the rice he can get “will come at a higher cost and obviously it will affect rice from wherever else we can get it, like Thailand or Vietnam. In West Africa, where I am, it creates a serious problem.”
Rice is a common staple of food aid, and India’s ban has the potential to make it costlier for international organizations like the World Food Program to feed those who are most in need, said Joe Glauber, a senior research fellow at the International Food Policy Research Institute and former USDA chief economist.
Countries where Mercy Corps operates — from Ethiopia to Somalia to Yemen — are particularly vulnerable to spikes in food prices, said Andrea Mottram, interim senior director of food security for the NGO.
Joe Glauber, IFPRIThe ongoing food crises in those countries “remains a pressing concern, primarily revolving around issues of affordability,” says Mottram. “Any increase to global prices as a result of either Black Sea Grain Initiative [withdrawal] or the India rice export ban could potentially rapidly increase the price of staple goods such as bread and rice putting millions at risk.”
Russia recently terminated the Black Sea Grain Initiative, a deal brokered by the United Nations that allowed Ukraine to export grain from three key ports in Odesa. Ethiopia and Yemen were the top two largest recipients of donated Ukrainian wheat under the Initiative, according to U.N. data.
“India is a major supplier to rice to several important markets in Asia and sub-Saharan Africa, making their populations vulnerable to rice market disruptions,” according to an IFRI analysis. “Forty-two countries get more than 50% percent of their total rice imports from India, a significant share not easily substituted with imports from other large exporting countries such as Vietnam, Thailand, or Pakistan. In Africa, India’s market share in 2022 exceeded 80% for several countries.”
And recent price spikes on the international rice market may just be the start, says Hamilton.
“It’s not over with,” Hamilton told Agri-Pulse. “We are not necessarily at a level where it’s the top of the market. Nobody knows how high it’s going to go.”
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The overall severity of the impacts from India’s rice ban will depend on several factors, including how strictly India enforces the ban — erected over fears of a smaller crop this year and as a measure to curb inflation — and whether other exporting countries also decide to block exports.
A potentially positive development was India’s decision last week to make an exception to the ban to allow exports of about 149,000 tons of broken rice to Mali and Bhutan, according to Platts.
But the ban is still worrying countries concerned about feeding their people. The United Arab Emirates, which relies on imports for almost its entire food supply, on Friday banned rice exports in an effort to make sure that the rice it has on hand does not leave the country, according to Al-Monitor, a Middle East news outlet.
The UAE ban, said Glauber, “is not a good sign, but if it’s Vietnam, I’m very worried.” As a major rice exporter, an export ban by Vietnam would take even more of the grain off the world market.
As to the fate of India’s next rice harvest, it’s still unclear, said Hamilton, who points to data from the country’s meteorological department.
About 34% of India hasn’t received enough rain, and 32% has gotten too much.
“Heavy rainfall has damaged newly planted rice crops in northern states … and many farmers have had to replant,” Hamilton says in his newsletter, The First Grain Market Strategist. “On the other hand, scant rainfall has delayed the planting of rice, corn, cotton, soybeans, groundnuts and pulses in [other] states …”
If India has a good crop, the country may rethink the ban, said Glauber, who added: “I certainly hope they would.”
Hanks expressed concern that if India has a poor harvest, the country may consider also banning exports of parboiled rice.
As it stands now, India is only banning long grain white rice and not rice that has been parboiled, or basmati rice, and that takes the equivalent of about 6 million tons per year off the market, said Hanks.
India exports about 8 million tons of parboiled rice and 5 million tons of basmati.
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