Rice Exports Bans imposed by India, the UAE, and Russia exacerbates Global Food Security
On July 20, the Indian government announced an immediate export ban on non-basmati rice varieties to lower high domestic prices and secure supplies in the Indian market. The Ministry of Consumer Affairs, Food, and Public Distribution elaborated that this decision was necessary after India’s previous efforts to reduce prices failed. In Sept-22, the Indian government imposed a 20% export tariff on non-basmati rice varieties, a decision that was met with condemnation. However, due to high foreign demand, exports reached a record number of 22.3 million metric tons (mmt) in 2022. This increased domestic prices 11.5% more than last year and a 3% increase over the past month.
This announcement comes after Indian farmers raised concerns about the effects of adverse weather on their rice output and yield this harvesting season. In the crucial rice planting period of June and July, India saw uneven rainfall distribution from changing monsoon patterns, leading to delays in planting and damaging newly planted summer crops. The forecasted El Niño is another factor casting doubts on India’s future rice supply.
However, critics pointed out that despite weather concerns, the Indian government is already sitting on ample rice supply since 23.7 million hectares (ha) were already planted with summer-sown rice, a 1.71% increase year-on-year (YoY). They further emphasized that the ban seems politically driven.
Inflation and high food prices incite negative public sentiment, threatening Prime Minister Narendra Modi’s popularity. With national and state-level elections looming, the administration’s sensitivity to food inflation is apparent. The administration has been banning wheat exports and capping sugar exports since last year, with little regard to their global implications.
India has been a global rice supplier for the past decade. They are the leading rice exporter, contributing 40% of global rice exports from 2022 to 2023. While this export ban does not include the most popular rice variety, basmati rice, non-basmati rice varieties still constitute 25% of their total exports. The sudden export ban has become apparent in the rice market, raising concerns about food crises in food-insecure and import-reliant nations in Africa and the Middle East.
Vietnam and Thailand have already seen spikes in prices after the announcement. On July 27, Vietnam’s 5% broken rice increased to USD 550 to 575 per mt from USD 515 to 525 a week ago, the highest since 2011. In Thailand, 5% broken rice increased to USD 605 to 610 per mt from USD 545 a week ago. Indian expats' panic buying and hoarding have increased prices, with some stores in the United States and Canada enforcing a buying limit.
Source: World Bank
The announcement comes when global rice prices are elevated and prone to price volatility amidst the war in Ukraine, Russia’s withdrawal from the Black Sea Grain Initiative, and adverse weather lowering yields from major rice-producing countries, China and Pakistan.
India’s export ban will only exacerbate inflation and worsen global hardships. There are also concerns about history repeating itself, with other countries possibly following India’s footsteps. During the 2007 to 2008 global rice crisis, when India and Vietnam imposed restrictions on rice exports, several rice exporting countries such as Brazil, Egypt, and Pakistan also set their own trade restrictions. This ultimately led to the devastating situation where rice prices increased 117% to 149% in Q1-2008. Since India’s announcement on July 20, other countries are also taking similar stances. The UAE Ministry of Economy announced on July 28 that the UAE will ban exporting all rice for four months. On July 29, the Russian government announced bans on raw and processed rice until the end of the year.
As alarming as the situation is, current conditions differ from those leading up to the food crisis in 2007. The Indian government is granting rice export exemptions in certain situations and countries. For instance, Singapore is currently working with Indian officials for an exemption.
In addition, major rice-producing countries, such as Vietnam and Thailand, have not implemented export restrictions. Vietnam’s chairman of the Vietnam Food Association announced on July 31 that Vietnam’s rice exports will continue as usual. Nonetheless, the current events from India, the UAE, and Russia are concerning and reversing these export restrictions are needed for stability in the global rice market.