India Rice Export Ban
On 20th July 2023, India issued an order to ban all exports of non-basmati white rice to other countries. The Indian rice export ban is a response from the Indian government to address the significant crop damage caused by the late but heavy monsoon rains in India. Its aim is to ensure sufficient availability of the grain in the Indian market and control the rise in domestic prices in India.
Global Rice Prices Hit 15-Year High After India’s Rice Export Ban
Figure 1. Estimated Share in Global Rice Exports for 2023 by Reuters
India's position as the world's largest exporter of rice, accounting for over 40% of global rice exports, is highly significant in the global food market. The decision to halt rice exports has raised potential concerns for exporters with low inventories, resulting in an increase in rice prices.
According to Channel News Asia (CNA), the global rice prices have surged by approximately 20 percent, reaching the highest point in 15 years.
Business Recorder reported that uncertainty about the ban's duration and concerns over export restrictions prompted supply-chain participants to hold on to stocks, renegotiate contracts, or refrain from making price offers, thereby limiting most trade to small volumes and previously agreed-upon sales.
This situation arises amid existing high food prices, influenced by the impact of Russia's invasion of Ukraine last year and unpredictable weather patterns.
India Expand Rice Export Curbs with Extra 20% Duty Fees
According to Reuters, India has further restricted its rice exports by imposing a 20% duty fee on parboiled rice exports, effective from 25th August 25 2023. This additional measure could be contributing to the rise in rice prices, causing it to reach a 15-year high.
Reuters also reported that due to the implementation of this duty fee, Indian parboiled rice would become as expensive to supplies from Thailand and Pakistan.
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Will Rice Prices Go Down After G20 Summit India 2023?
On 10th September 2023, the G20 nations gathered for the G20 Summit in India, New Delhi,. India’s Prime Minister Narendra Modi held various meetings with the G20 global leaders to discuss crucial global issues such as food security, climate and energy, development, health and digitalization.
AMIS Pitches Removal of India’s Rice Export Ban
While there was no detailed discussion of rice prices or the rice export ban at the G20 summit, Indian Express reported that the leaders did announce their commitment to global food security and nutrition towards eliminating hunger and malnutrition.
Additionally, the Agricultural Market Information System (AMIS), an inter-agency platform aimed at enhancing food market transparency and policy responses for food security, has released a note highlighting the disruptive impact of India's rice export restrictions.
Logistic Insider also reported that the G20 leaders unanimously opposed the imposition of export bans or restrictions that distort markets, in line with WTO rules. The leaders' declaration in New Delhi expressed support for AMIS and proposed its expansion to include fertilizers and vegetable oils, in addition to its current focus on wheat, maize, rice, and soybeans. The goal is to help stabilize and bring down global food prices.
Rice Market Outlook
According to India Shipping News, India has exempted certain countries, including Mauritius, Bhutan, and Singapore, from its rice export ban on the grounds of food security. Guinea has also sent its trade minister to New Delhi to convince the Indian government to exempt the West African country from the restriction.
CNA also reported that Vietnam is planning to increase rice production by approximately 200,000 tonnes this year to cope with the surge in demand resulting from India's rice export ban.
With the promised increase in rice supply from Vietnam and the potential for more countries to be exempted from India's export ban, there is hope that rice prices may decrease in the near future. However, the rice market remains influenced by various factors, and price trends can be complex.
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