India’s Expected Rice Production Decline in 2024 Could Further Boost Prices

India's 2023/24 Rice Production Trends and Potential Export Impact

India's rice production has gradually increased over the last five years, reaching 135.8 million metric tons (mmt) in 2022/23. The rice sowing area has also risen from 44.16 million hectares (ha) in 2018/19 to 46.38 million ha in 2021/22. However, due to adverse weather in 2023, India's rice production, including jasmine rice, has experienced its first drop in eight years. For the 2023/24 season, India's rice production is predicted to decrease to 123.8 mmt. This decline in production might lead the government to consider tightening export controls. In Jul-23, the country imposed restrictions on the export of non-basmati white rice, leading to a global price hike. If export limits are extended, food costs could be further raised due to limited stock in other major exporting countries such as Thailand, Vietnam, Pakistan, and Myanmar.

Figure 1: Top 10 Trade Flows of India’s Rice Exports

Source: Tridge

From Aug-23 to Nov-23, India exported just 28,500 metric tons (mt) of broken rice, a 95% year-over-year (YoY) decrease, while in the same period, non-basmati white rice exports reached approximately 154,000 mt, a 93% YoY drop. India's export limitations have agitated the global rice market, with exports to West Africa and non-basmati white rice being the most affected. During this period, major imported rice types in sub-Saharan Africa likewise saw a 50% or more reduction, with West Africa's rice exports falling by 54% and East and Central Africa's falling by 58% and 80%, respectively.

Figure 2: Tridge Price Indices and Forecasts-India Rice

Source: Tridge

The predicted fall in rice production in India could have far-reaching consequences for the domestic and global rice markets. India's predicted reduction in rice output in 2024 could drive up prices due to a variety of variables, such as severe meteorological conditions, changing farming techniques, and government policies. Climate change effects, such as excessive rainfall, heat, and floods, also impacted rice output in Pakistan and California, contributing to a global drop. India has historically been a significant rice exporter, accounting for more than 40% of global rice exports. The impact of this fall will be determined by a variety of factors, including the magnitude of the decrease in production and the response of other rice-producing countries. However, any considerable drop in Indian rice production will likely result in higher prices and possible regional food security concerns.

The decline in India's rice production, coupled with export restrictions, has significantly reduced the country's rice exports and contributed to the global rise in rice prices. Government policies aimed at ensuring food security and controlling local prices, such as restrictions on wheat and sugar exports, have also impacted the international rice market.

India's monsoon season, a crucial period for rice cultivation, witnessed patchy rains in 2023, adversely affecting rice yields. The impacts of El Niño have further tightened the global rice market, with world stockpiles heading for a third consecutive annual decline. Tridge acknowledges that the government's measures, including export curbs, have helped stabilize domestic rice prices while limiting India's ability to capitalize on global demand and maintain its position as a major rice exporter. In light of current market trends, Tridge expects that the prolonged export restrictions will likely elevate rice prices, with buyers from vulnerable importing nations facing challenges due to India's reduced exports.