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Race for rice: India’s ban on exporting non-basmati triggers panic buying in the US

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Virendra Pandit 

 

New Delhi: Close on the heels of Russia exiting the Black Sea Agreements and bombing Ukraine’s last granaries, thus triggering a possible food scarcity in many countries, India’s ban on white rice exports has also panicked many people worldwide.

After the International Monetary Fund (IMF) expressed concern at India’s June 20 ban on exporting white rice, the media reported on Thursday panic buying, hoarding, and price gouging across the United States. The ban has sent shockwaves through the global food market, as India is a major rice exporter.

The news of the ban sparked a frenzy as Non-Resident Indians (NRIs) scrambled to secure their supply of non-Basmati white rice, a staple of many Indian cuisines. Videos circulating on social media showed people rushing to grab the last remaining rice bags at giant stores, the reports said.

As of July 1, India had ample stocks of non-basmati rice, at around 41 million tons, sufficient to meet both domestic public distribution and government-level trade.  But the government wanted to ensure enough food stocks at home because of the uncertainties of global supplies due to the ongoing Russia-Ukraine war.

The Indian ban with immediate effect on the export of white rice sent shockwaves through the global market, leading to a scramble for supplies and heightening concerns over food security.

India’s export ban aims to ensure domestic availability and lower prices for consumers at home. However, its ripple effects are being felt far and wide, particularly in the US where the South Asian grocery stores are witnessing unprecedented demand.

Even though the export ban does not include premium-grade Basmati rice, consumers are buying it up as well in bulk as a precautionary measure, prompting wholesalers and rice companies to even double the prices in some places.

The ban, which is expected to reduce the availability of this staple food by about a fifth on the world market, could prompt importers to seek more government-to-government deals to mitigate shortages and control escalating prices, the media reported.

The decision to halt exports is being viewed as a blow to the reliability of international trade, Shirley Mustafa, a rice market analyst at the United Nations’ Food and Agriculture Organization (FAO), said.

“Export restrictions inherently reduce trust in the dependability of international trade,” he was quoted as saying.

As a result, importing countries may resort to direct deals with governments to ensure a steady supply of rice, he added.

This week, the IMF said it would “encourage” India to remove restrictions on exports, citing the profound impact it could have on global inflation.

Despite the ban, India indicated its willingness to consider meeting the requirements of countries in need of rice supplies.

In fact, since India banned exports of broken rice in September 2022 to cool domestic prices, it also approved sales of around one million metric tons of this variety to Indonesia, Senegal, Gambia, Mali, and Ethiopia, among others.

According to reports, Vietnam is due to start harvesting its main crop, which could further alleviate the strain on global rice supplies.

African buyers may approach India for rice sales, while Asian importers like Indonesia and the Philippines could sign government-to-government contracts with top rice exporters such as Thailand and Vietnam.

Indonesia has already signed an agreement with India to potentially import one million metric tons of rice if the El Nino weather pattern disrupts its domestic supplies.