Indian Government, earlier this week, announced that it will ban the exports of rice to the other countries. This is a move from the government to ensure that the rice produce from India stays in the country as it is hit by the high prices in the country as the tomato prices in the country have increased by 300%. However, the problem with India’s rice ban is that a lot of countries that depend on India’s rice for their own consumption will be hit as it is known that 40% of world’s rice demand is fulfilled by India’s rice exports.
“Global rice [supplies] would drastically tighten … since the country is the world’s second top producer of the food staple,” and added that “Bangladesh and Nepal would be hardest hit by the ban, as both countries are top export destinations.” He also said that “In addition to a reduction in global rice supply, panic reactions and speculation on global rice markets would exacerbate the increase in prices”. Gro Intelligence’s analysts said that “Top destinations for Indian rice include Bangladesh, China, Benin, and Nepal. Other African countries also import a large amount of Indian rice,”
Another analyst said that “Rice inflation has already accelerated from an average 6% year-on-year last year to nearly 12% in June 2023.” Rabobank senior analyst Oscar Tjakra predicted global rice prices will rise further due to India’s share of the global market. Tjakra predicted prices could even surpass second-quarter highs when rough rice hit $18-levels per cwt. Some analysts also said that “Affected importers may turn to alternative suppliers in the region, like Thailand and Vietnam”.
It is already seen that the wheat prices are at a more-than-decade high as “tighter supplies when the staple became an attractive alternative as prices of other major grains surged following Russia’s invasion of Ukraine in February 2022”. Also, “Wheat prices jumped this week after Russia withdrew from the Black Sea grain deal” as per reports. Apart from the tomato and rice prices, the country has been hit by higher vegetable and fruit prices as well which is the reason why India’s inflation has increased a lot in last few months.