Rice is a staple food for more than 3 billion people, and nearly 85-90% of this water-intensive crop is produced in Asia. The Asia-Pacific Region, where more than 56 percent of the world’s population live, adds 51 million more rice consumers annually. Along with its production, rice consumption in Asia also accounts for about 90% of the global rice consumption, making it the region with the largest consumption of this staple food. Some of the countries with highest rice consumption per capita in Asia include Laos and Cambodia. 

Asia, however, is also a region where the El Nino weather pattern usually brings lower rainfall. 

El Nino, as it is commonly known ,describes an unusual warming of the surface waters in the Pacific Ocean's equatorial region. This climatic condition is known for reducing monsoon rains. Changes in weather patterns and circulation have been brought on by the impact of this warming effect on the atmospheric patterns. El Nino has been linked, in the case of India, to weakening of the monsoon circulation, which has led to a decrease in rainfall.

The opposite phase, La Nina, which is the abnormal cooling of sea surface waters in the same region, is known to aid rainfall over India.

India and Rice Exports

India now accounts for more than 40% of global rice trade as compared to 22% share around 15 years ago creating a pressure on other rice exporting nations such as Thailand and Vietnam. India exports rice to more than 140 countries. Key buyers of Indian non-basmati rice include: Benin, Bangladesh, Angola, Cameroon, Djibouti, Guinea, Ivory Coast, Kenya and Nepal. Iran, Iraq and Saudi Arabia mainly buy premium basmati rice from India.

India exported 17.86 million tons of non-basmati rice in 2022, including 10.3 million tons of non-basmati white rice. In September 2022, India banned exports of broken rice and imposed a 20% duty on exports of various grades of rice. Due to the monsoon's late arrival, there was a significant rain shortage up until mid-June. Additionally, even if the absence had to be filled up by strong rains during the last week of June, the crops suffered severe damage.

Why Did India Decide to Ban the Export of Non-basmati Rice?

On July 20,2023, the government of India, the largest exporter of rice in the world, banned the export of non-basmati white rice in an attempt to control rising domestic food expenses and ensure sufficient availability in the country at reasonable prices. 

The unpredictable climate had influenced the government's decision to ban rice exports. While the monsoon's late arrival led to a major rain shortage until mid-June, strong rains since the final week of June have seriously damaged crops, especially in Punjab and Haryana. According to estimates, 2.4 lakh hectares of paddy farming in Punjab alone have been affected, and 83,000 hectares of land will be replanted with crops. However, farmers must wait for the waters to decrease before replanting. 

Farmers in other significant rice-growing states have set up nurseries for paddy but have been unable to transfer the seedlings because of insufficient rainfall. The government was hoping that by raising the Minimum Support Price (MSP) for paddy, the area planted in rice would grow, but farmers have so far planted 6% less paddy than they did in 2022.

The government states that the action aims to guarantee cheaper costs and sufficient supply throughout the upcoming festival season. Rice prices on the domestic market are rising. Retail prices increased by 11.5% over the previous year and by 3% over the last month, according to the statement.

Nevertheless, Thailand, Vietnam and Pakistan, the world's second, third and fourth biggest rice exporting nations and they’ve said that they are keen to boost sales since demand for their crops has been rising after India’s ban. 

The Effect of the Ban

Global prices have risen by around 20% since India’s ban. A further 15% gain could lead to restrictions by Thailand and Vietnam according to traders at International Trading Companies. The question isn’t about whether they will limit exports, but rather how much they will restrict and when they will take such measures. Since a few weeks ago, rice prices in Thailand and Vietnam have risen to 15 years-high as buyers rushed to gather extra supplies to compensate for the decline in India’s exports. 

Malaysia appears to be the most vulnerable according to the analysis made by Barclyas. It imports a substantial portion of its rice supply, and India accounts for a relatively large share of its rice imports. Singapore is likely to be affected as well, with the report showing that India makes up around 30% of the city state’s rice imports. Barclays pointed out that Singapore is heavily dependent on food imports in general, not just rice, however. The nation is presently working to get exemptions from India's ban.

The entire world would be facing possible instability in the rice market if large importers like Indonesia and Malaysia hurry to build up stocks while major rice exporters like Vietnam and Cambodia apply their own kind of export restrictions. 

Millions of people would be affected by the Indian ban on rice, according to Mohanty, who also noted that poorer consumers in India's neighbors, notably Bangladesh and Nepal, will be the most severely impacted.

More than 40% of the world's 55.4 million metric tonnes of exported rice in 2022 came from India. In 2022, India exported a record 22.2 million tonnes of rice, exceeding the combined exports of the following four nations: Thailand, Vietnam, Pakistan, and the United States. 

The likelihood that India's actions will influence other nations that export rice is very high. The unfortunate lesson from the rises in food prices in 2007 and 2008 was that once a few major rice exporters imposed restrictions, other rice exporters did the same. Restrictions were implemented by Vietnam in June 2007, India in October 2007, and Pakistan and Thailand joined in May 2008. These four nations together accounted for more than 70% of the market. 

Conclusion:

India's move to ban the export of non-basmati rice risks the already unstable global food security to further dangers in the commodities markets. What unfolds and the extent of the consequences will depend on a number of variables, including the weather in the coming days, the details of the export ban, and the responses of other rice exporters. The earlier price spikes lessons which had long-lasting effects on world hunger, food insecurity, nutrition, and poverty will probably guide trade policy decisions and discourage nations from imposing export restrictions.