More than half of the world's population relies on rice for consumption. India is the largest exporter, accounting for more than 40% of global rice commerce. Why is India crucial when it comes to rice and international trade?
India is the second-largest consumer of rice, following China's lead, and one of the largest rice export markets. According to an analytical article by The Economic Times, "India's rice exports touched a record 21.5 million metric tonnes in 2021, more than the combined shipments of the world's next four biggest exporters of the grain: Thailand, Vietnam, Pakistan, and the United States." A Reuters article notes how India is a significant player when it comes to the rice export market. The country supplies over 150 countries. The monsoon season in India is critical to the reaping season, accounting for more than 85% of total yearly production. India's rice exports were 54 million metric tonnes in 2022.
The question is, what impact would India's suspension of rice exports have on these countries? It will impact on all importing countries' requests, as well as opposing countries like Vietnam and Thailand, which would boost their prices, which are 30% higher than India's shipments.
In September 2022, India banned the export of broken rice and put a 20% levy on rice exports of all grades. In the same year, a similar restriction occurred with wheat. According to The Mint, on July 20, 2023, the country banned the export of non-basmati white rice to increase local supply and keep retail prices under control over the impending festival season, which accounts for around 25% of the country's total rice export; the collection rose to 4.5 million in 2022–23. This occurred after Russia withdrew from the Black Sea grain deal.
A few other reasons that led to such a significant step in the commerce field were irregular or uneven rains that led to the shortage in production, which is inadequate within the country itself, and the lingering effects of COVID-19. Sourcing from DNA, the Food Ministry stated, "To ensure adequate availability of non-basmati white rice in the Indian market and to allay the rise in prices in the domestic market, the government of India has amended the export policy."
The worldwide rice shortage caused hoarding, price gouging, and panic buying. Panic buying is buying a substantial quantity of a given product based on unexpected fears that there will be shortages or price rises. Thus, Canada, the United States, Australia, and many other importing countries are under the repercussions of this ban and evidence of panic buying.
According to NDTV, in the United States, citizens and especially Non-Resident Indians, or NRIs, waited in long queues for hours. Every family, especially NRIs, purchased ten or fifteen NRI bags. Local markets or wholesale sellers faced challenges when customers called in for the stock of specific rice and placed orders in large quantities. The proprietor of Sapna Foods, located in Missouri, Tarun Sardana, stated they experienced a surge in demand. "We've been receiving a lot of additional inquiries about the special rice, Sona Massori. There was even more demand over the weekend. Everybody was trying to get as much South Indian rice out of the warehouse as ours on Monday morning," said Mr. Sardana.
A Twitter video shared by Siraj Noorani on July 22, 2023, showcased panic buying in warehouses in Dallas. And some have recalled this panic buying associated with the shortage of baby formula during the Ukraine War and COVID-19.
News from the CBC reported a similar situation in Canada. Sriram Ramamurthy, manager of Iqbal Halal Foods in Toronto, said there was a sudden rise in demand for rice when word came last week that it was going to be banned. "They have been flooding in, trying to get more and more." He introduced a limitation of one bag for each customer, which became redundant as the customers would return with other family members and try to select two or three at once."
The Week stated that Indonesia and the Philippines would likely be most affected. The prohibition in India will probably lead to additional food price inflation and the possibility of increasing food insecurity beyond its borders.
The ban has undoubtedly brought about significant changes in lifestyles, the economy, and trade.
Edited by Whitney Edna Ibe
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