India's rice export ban leaves countries scrambling

(File) Labourers use shovels to separate rice husk from the grain at a wholesale grain market in Amritsar. Image: Narinder Nanu / AFP

 

Why was the export ban imposed?

On July 20 India imposed a ban on export of non-basmati varieties of rice. This was done to ensure domestic availability at reasonable prices. Export of non-basmati varieties account for 25-30 percent of rice exports. Last year, as prices started moving up in the global market the government had imposed a 20 percent duty on export of rice but exports continued to rise. There was also a complete ban on export of broken rice. Besides, rice buffer stocks are running low.
 

Where do Indian rice exports go?

Iran is the largest export destination for Indian rice with 10.7 percent of total exports going there. They bring in on average $1.2 billion a year. Next comes Saudi Arabia with $1 billion in Indian rice exports amounting to 9.2 percent of the total. China is at number three with $0.7 billion or 6.2 percent of Indian rice exports. But Indian rice imports comprise a significant share for some African countries. Benin imports $0.6 billion worth and Senegal and Cote D’Iviore import $0.4 billion worth of Indian rice. 

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Why are Malaysia, Indonesia and Philippines more affected?

As a percentage of their share of imports from India, Malaysia and Indonesia have a higher share as compared to say China, Iran or Saudi Arabia. Rice is also widely consumed across Asia and that means the scope for import substitution is less. Malaysia is expected to be the most affected and there are already some reports of shortages of broken rice, which goes into the production of rice flour. Philippines imports about 20 percent of its rice but mainly from Vietnam but here price pressures may rise due to global rice prices rising due to India’s import ban. Also the weight of rice in Philippines’ CPI basket is the highest in the region. 

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What does this mean for Indian rice exports?

As the export ban accounts for only 25 percent of rice varieties in India expect the net export numbers to still remain high. And rice accounts only for 2.5 percent of Indian exports. But since the government continues to provide free foodgrains to 800 million Indians buffer stocks need to be maintained. This means that analysts expect the rice ban to stay. Remember India had announced a ban on wheat exports as well after warm weather disrupted the kharif crop.