What Countries Would Be Hit By India's Prohibition on Rice Exports, and Who Would Benefit?

The biggest rice exporter in the world, India, has prohibited the shipment of broken rice temporarily, which Sanchit Gupta reports. The government forbade the export of broken rice to regulate domestic prices.

The government cites two reasons

First, there is a chance of a significant decrease in monsoon rains in some parts of the country. Since paddy is planted between June and July, any area planted after that will certainly be of lower-yielding, shorter-duration varieties. A new virus that has "dwarfed" paddy plants in many of those fields may have an impact on prices as well.

The second concerns stocks. Public wheat stocks are at their lowest level in 14 years. In the event of a poor Kharif harvest, the government is concerned about their depletion. This is especially true in light of political pressure to extend the free food grain program beyond September. Because there is so little wheat in PDS godowns, rice keeps the system afloat.

Countries affected

The Asian nation Philippines, will be affected, which imports more than 20% of the rice it consumes. According to Statista, rice and rice-related products make up 25% of the nation's food CPI basket, the highest percentage in the area and Asia's largest net commodity importer.

The Philippines Statistics Authority said recently that the country's inflation rate in August was 6.3%, which was higher than the 2% to 4% target range set by the central bank.

Asia's second-most afflicted nation is probably Indonesia. Rice makes up approximately 15% of the total CPI basket for food, and imports meet 2.1% of the nation's rice consumption.

The vulnerability needs to be viewed in terms of both the impact on consumer spending and how dependent countries are on imported food supplies.

Countries that will benefit

Thailand and Vietnam will most likely profit from India's temporary ban. That's because they're the world's second and third-largest rice exporters, making them the most likely options for nations looking to fill the gap.

Vietnam's total rice production was approximately 44 million tons in 2021, with global exports bringing in $3.133 billion, according to a report published by research firm Global Information in July. Statista also showed that Thailand produced 21.4 million tonnes of rice in 2021, an increase of 2.18 million tonnes from the previous year.

With the increase in exports and India's ban, the overall value of rice exports will increase, and these two countries might benefit from it.

Reasons for the government's decision

Some might have criticized the prohibition of rice exports, arguing that it would harm farmers and increase consumer prices. But Nevertheless, the government has already announced that affected farmers will receive financial aid. And while prices may temporarily increase, the government is confident they will stabilize over time.

Economists concur that the government's decision to prohibit rice exports is a step in the right direction toward ensuring the nation's food security. Even though India is the world's largest rice producer, the country is still feeling the effects of the COVID-19 lockdowns of the previous year. The government has decided to extend its free foodgrains program, Pradhan Mantri-Garib Kalyan Anna Yojana (PM-GKAY), for three more months, until the end of December.

Beneficiaries of the 2013 National Food Security Act are entitled to an additional 5 kg of food grains per person per month, per PM-GKAY.

Following a Cabinet meeting, the Union Minister of Information and Broadcasting, Anurag Thakur, informed the media that 122 Lakh Metric Tonnes (LMT) of foodgrains would be distributed between October and December at a subsidy cost of Rs 44,762 crore. The decision would ensure that disadvantaged and vulnerable segments of society are supported during upcoming major festivals.

"Recognizing that people struggled because of the pandemic, the government has decided to extend PM-GKAY for three months so that the poor and vulnerable sections of society are supported for the upcoming major festivals, such as Navratri, Dussehra, Milad-un-nabi, Deepawali, Chhath pooja, Gurunanakdev Jayanti, Christmas, etc.," said Thakur.

Credits /Co-Author: Sanchit Gupta

About Sanchit Gupta

Sanchit Gupta is a freelance journalist based in India. He founded and is the Editor-in-Chief of IndiaReflects.com, the country's first real-world news outlet. Visit IndiaReflects.com and follow their social media platforms for more information on his work to end disinformation.

Sanchit Gupta

comtex tracking