In a significant move on July 20th, India took action to stabilize domestic rice prices by imposing a ban on the export of non-basmati white rice. However, this decision had far-reaching consequences, sending shockwaves throughout global rice markets and impacting consumers and economies worldwide.

The global rice market is characterized by its diversity, with thousands of rice varieties, but four primary groups dominate international trade. Long-grain Indica rice represents the lion’s share of global trade, while fragrant basmati, short-grained Japonica (used in sushi and risottos), and glutinous rice (used in sweets) make up the rest.

India, as the world’s leading rice exporter, typically accounts for roughly 40% of global rice trade, with other major players including Thailand, Vietnam, Pakistan, and the US. Importantly, key rice-importing nations such as China, the Philippines, and Nigeria rely on these exports, while countries like Indonesia and Bangladesh increase imports during domestic shortages. Notably, rice consumption is on the rise in Africa, and in some regions like Cuba and Panama, rice serves as a primary source of energy.

In 2022, India exported a substantial 22 million tonnes of rice to 140 countries, including six million tonnes of the more affordable Indica white rice, which constitutes approximately 70% of global rice trade.

India’s recent export restrictions, coupled with the prior year’s ban on broken rice exports and the imposition of a 20% duty on non-basmati rice exports, have raised concerns about surging global rice prices. The IMF’s chief economist, Pierre-Olivier Gourinchas, even predicts that the ban could drive global grain prices up by as much as 15% this year.

India’s export restrictions come at a precarious juncture. Global rice prices have been on a steady upward trajectory since early 2022, with a notable 14% increase since June of the same year. Additionally, the arrival of new rice crops in the markets is still roughly three months away. Unfavorable weather conditions in South Asia, marked by uneven monsoon rains in India and devastating floods in Pakistan, have disrupted supplies. Rising fertilizer prices have also compounded the cost of rice production.

The depreciation of currencies has further inflated import costs for numerous nations, while persistent high inflation has elevated borrowing costs for those involved in the rice trade. Nevertheless, experts contend that India’s export ban poses the greatest risk, as it is expected to significantly elevate global white rice prices and detrimentally impact the food security of many African nations. Scholars from the Indian Council for Research on International Economic Relations (ICRIER) underscore the importance of India avoiding abrupt export bans, not only to maintain its position as a responsible leader within the G-20’s Global South but also to preserve its reputation as a reliable rice supplier on the world stage.

The problem with the availability of Rice is a big question mark upon the global market and immediate steps have to be taken to get the staple food of the world back on track.