INDIA- India, the world’s leading rice exporter, is anticipated to extend its restrictions on overseas sales into 2024, a move that is likely to keep rice prices globally elevated.
Despite being a major contributor to the international rice market, Prime Minister Narendra Modi’s government aims to control domestic price surges, particularly as he faces an impending reelection.
Lower prices and substantial stockpiles have positioned India as a key player in global rice exports, accounting for almost 40% of the total in recent years, with African nations such as Benin and Senegal being among the top buyers.
However, Modi’s administration has consistently tightened export restrictions to curb domestic price rises and protect Indian consumers.
“As long as domestic rice prices face upward pressure, the restrictions are likely to stay,” commented 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 implemented export duties, set minimum prices, and prohibited the export of broken and non-basmati white rice varieties. These measures led to a surge in prices, reaching a 15-year high in August. In October, rice prices remained 24% higher than the previous year, according to the UN’s Food and Agriculture Organization.
B.V. Krishna Rao, president of the Rice Exporters Association, stated that the government is likely to maintain export restrictions until the upcoming election to ensure adequate supplies domestically and control price increases.
The looming El Niño, known for affecting crops across Asia, could further tighten the global rice market. Thailand, the second-largest exporter, has already projected a 6% decline in paddy output for 2023-24 due to dry weather.
Joseph Glauber, a senior fellow at the International Food Policy Research Institute, emphasized the challenge of replacing India as a major supplier, stating, “Rice is tough because there are just not a lot of other suppliers. India leaves a big hole to fill.”
Adding to the complexity, concerns over India’s crops have increased due to a potential 4% drop in the monsoon-sown harvest from the previous year, attributed to patchy rains.
To address rising food costs, Modi’s government has extended the country’s free food program, benefiting over 800 million people. Retail prices of rice in New Delhi have risen by 18% from the previous year, and wheat is 11% more expensive, according to data from the food ministry.
While India’s policy may benefit its own consumers, it poses challenges for vulnerable populations in Africa and Asia, where billions depend on a consistent global rice supply. Rice inflation in the Philippines reached a 14-year high in September, and Indonesia is increasing rice imports to cool prices before its 2024 presidential election.
In West Africa, Nigerians have experienced a 61% jump in rice prices, contributing to a 30.6% annual food inflation rate in September.