India, the world’s top rice exporter, is expected to maintain its curbs on overseas sales well into next year, a move likely to hold the staple grain at close to its highest price levels since the food crisis of 2008, according to Economic Times.
Lower prices and ample stockpiles have helped make India one of the top shippers globally over the past decade, recently accounting for almost 40% of the total. African nations like Benin and Senegal are among the top buyers.
But Prime Minister Narendra Modi, who will seek reelection next year, has repeatedly tightened restrictions on shipments in a bid to curb domestic price rises and shield Indian consumers.
“As long as domestic rice prices face upward pressure, the restrictions are likely to stay,” said Sonal Varma, chief economist for India and Asia ex-Japan at Nomura Holdings Inc. “Even after the elections, if domestic rice prices do not stabilize, these measures are likely to get extended.”
India has imposed export duties and minimum prices, while broken and non-basmati white rice varieties cannot be exported. Prices surged to a 15-year high in August in response, with buyers from the most vulnerable importing nations holding back purchases. Some sought waivers. In October, rice was still 24% ahead of where it was a year ago, according to the UN’s Food and Agriculture Organization.
Modi’s government wants to ensure adequate supplies at home and to cool price increases, said B.V. Krishna Rao, president of the Rice Exporters Association, which represents the country’s shippers. He said the government would likely keep the export restrictions in place until the vote next year.
The arrival of El Niño, which typically wilts crops across Asia, may further tighten the global rice market, at a time when world stockpiles are heading for a third straight annual drop. The government in Thailand has said paddy output in the No. 2 exporter is likely to fall 6% in 2023-24 because of dry weather.
“Rice is tough because there are just not a lot of other suppliers,” said Joseph Glauber, a senior fellow at the International Food Policy Research Institute in Washington. India leaves “a big hole to fill,” he added.
To complicate matters further, jitters over India’s crop are adding to policymakers’ caution. The monsoon-sown harvest may drop almost 4% from a year earlier because of patchy rains, according to farm ministry estimates. Cumulative rainfall in the monsoon period from June to September was the weakest in five years.
Ensuring supplies are available to back the country’s free food program, which benefits more than 800 million people, is a top government priority. Modi said earlier this month that the arrangement will be extended by five years, making his announcement just days before a string of five state elections.
The handouts become more important as food costs continue to rise. Retail prices of rice in New Delhi are up 18% from a year earlier, while wheat is 11% more expensive, according to data compiled by the food ministry.
A spokesperson for the food and trade ministries said the government is keeping a constant watch on food prices and an appropriate decision on exports would be taken at the right time, keeping in mind interests of consumers as well as those of farmers.
India’s policy may ultimately benefit cash-strapped consumers in the world’s most populous nation — but the same is not true for vulnerable populations elsewhere in Africa and Asia, where billions depend on plentiful global rice supply.
