India bans some rice exports immediately

India, the world’s biggest rice exporter, has banned some overseas sales of the grain "with immediate effect", the government said, in a move that could drive international prices even higher.

Rice is a major world food staple and prices on international markets have soared to decade highs as the world grappled with the Covid-19 pandemic, the war in Ukraine and the impact of the El Nino weather phenomenon on production levels.

News24 reported previously, when India was still mulling the decision that if a ban persists it could result in global panic buying, resulting in a spike in prices globally. India is South Africa's second biggest rice supplier after Thailand.

FNB senior agricultural economist Paul Makube told News24 that South Africa's access to multiple potential suppliers and the current bumper global rice crop, probably meant minimal price implications in the short term. What concerned him however was an extended ban by India for more than six months, which could spark global inflationary pressure on the cereal.

"Any disruption to trade, especially mega exporters, has huge implications for prices on the global market. Although there may not be an absolute effect on prices in the short term, if the ban exists for a significant period of time, that will obviously create some form of panic buying from other traditional suppliers and that obviously lifts prices and has inflationary implications."

India said on Friday it would ban exports of non-basmati white rice which accounts for around a quarter of its total the consumer affairs and food ministry said.

The move would "ensure adequate availability" and "allay the rise in prices in the domestic market", it said in a statement.

Shipments

India accounts for more than 40% of all global rice shipments, so the decision could "risk exacerbating food insecurity in countries highly dependent on rice imports," data analytics firm Gro Intelligence said in a note.

Countries expected to be hit by the ban include African nations, Turkey, Syria, and Pakistan all of them already struggling with high food-price inflation the firm added.

Global demand saw Indian exports of non-basmati white rice jump 35 percent year-on-year in the second quarter, the ministry said.

The increase came even after the government banned broken rice shipments and imposed a 20 percent export tax on white rice in September.

India exported 10.3 million tonnes of non-basmati white rice last year and Rabobank senior analyst Oscar Tjakra said alternative suppliers did not have spare capacity to fill the gap.

"Typically the major exporters are Thailand, Vietnam, and to some extent Pakistan and the US," he told AFP. "They won’t have enough supply of rice to replace these."

Moscow’s cancellation of the Black Sea grain deal that protected Ukrainian exports has already led to wheat prices creeping up, he pointed out.

"Obviously this will add into inflation around the world because rice can be used as a substitute for wheat."

Rice prices in India rose 14-15 percent in the year to March and the government "clearly viewed these as red lines from a domestic food security and inflation point of view", ratings agency Crisil’s research director Pushan Sharma said in a note.

India had already curbed exports of wheat and sugar last year to rein in prices.-Fin24