In the aftermath of Russia’s withdrawal from a Black Sea grain agreement, India has taken a parallel path by imposing restrictions on the export of non-basmati white rice. This move was underpinned by India’s valid concerns: internal rice prices surged from $550 to $650 per metric ton due to the confluence of El Niño and monsoon-related droughts, raising alarms about a potential rice scarcity. As the world’s largest rice exporter, India accounted for approximately 40 percent of the global rice trade last year. Despite the continuation of exports for parboiled and basmati rice, the imposition of restrictions has correlated with an escalation of global food prices, witnessing an increase of 15-25 percent. This development has prompted apprehensions within other key rice-producing and exporting nations across Asia due to the amplified susceptibility of paddy crops to El Niño. Several of these nations have begun stockpiling reserves in anticipation of potential scarcities.
The impact of India’s embargo on rice exports reverberates extensively, particularly in nations heavily reliant on Indian rice imports to satisfy their food demands. Across Asia, Africa, and the Middle East, numerous countries depend on Indian rice for sustenance. The ramifications are most acutely felt in economically challenged nations like Nepal and Bangladesh, alongside African counterparts such as Benin, Senegal, Togo, and Mali, which predominantly import broken rice. The sudden interruption in supply could propel food shortages, trigger steep price escalations, and potentially instigate unrest in these regions. Notably, rice prices in Nepal have surged by 16 percent since India’s announcement of these trade restrictions.
The potential shortfall in rice availability has the potential to cascade into affecting other vital commodities such as wheat, soybeans, and corn, often utilized as substitutes for rice in both human consumption and livestock feed. The consequent deficiencies in these commodities could also lead to increased fuel prices. Thailand, a substantial rice exporter acclaimed for its premium-quality rice, has taken steps to fill the void created by India’s export curbs. This transition has resulted in a surge in Thailand’s rice exports, providing a boost to its economy. Nonetheless, this situation underscores the fragility of the global food trade system, emphasizing the intricate interconnections within the realm of international trade.