India has banned non-basmati white rice exports to curb domestic inflation, raising fears of further increases in global food prices just days after wheat and corn prices were sent climbing by Russia’s termination of a key grain deal.
The immediate ban, introduced after heavy rains hit domestic crops, follows the failure of a 20% duty on international exports introduced in September to curb foreign demand, which has soared after extreme climate conditions hit production in countries.
India is the world’s largest rice exporter, accounting for more than 40% of global shipments. While the ban does not apply to higher-grade basmati rice – India’s best-known variety – non-basmati white rice accounts for about 25% of exports.
International sales of Indian rice soared by 35% in the year to June, contributing to a 3% rise in domestic prices over the past month alone. People in India are paying 11.5% more for rice than a year ago, according to its ministry of consumer affairs, food and public distribution.
The Indian government said the ban, introduced on Thursday evening, would “ensure adequate availability of non-basmati white rice in the Indian market” and lead to lowering of prices for domestic consumers.
Soaring food inflation has put pressure on the BJP government in Delhi in the run-up to national elections next year and state-level elections in the months to come.
India’s move sent the price of rice from several Asian countries higher on global markets, while traders said they expected prices to rise substantially in the coming days.
The price of India’s 5% broken parboiled variety had already been hovering this week close to a five-year peak between $421 and $428 (£328-334) a metric tonne, and on Friday it stood at about $424.50.
Thailand and Vietnam, respectively the world’s second and third-largest rice exporters, have also experienced rises in the prices of their 5% broken rice in recent times. Even before the announcement, Vietnam’s rice was trading at its highest level since 2011, and has since moved higher, while Thailand’s variety jumped to levels not seen for more than two years.
Global food supplies have been hit by Russia’s war in Ukraine, which has driven up commodity and grain prices around the world.
Russia’s decision earlier in the week to pull out of the year-old UN-brokered Black Sea grain initiative, which guaranteed safe passage for vessels carrying cereals, has prompted fresh concerns about a global food crisis.
Before the move by the Kremlin, the grain price had fallen by more a third (35%), while the wheat price had declined 14% since January and corn prices had been trading 20% lower.
The US has pledged a further $250m (£194m) to create and expand other routes for Ukrainian grain to leave the country, but Russia’s defence ministry has in effect said any ship leaving a Ukrainian port will be a legitimate military target, raising fears that supplies could face further disruption.
The interruption of Ukrainian grain exports comes as important growing regions in the US have been hit by unusually hot weather and lack of rain, leading to a reduction in forecasts for the US wheat harvest, with stocks estimated to fall to a 16-year low.
