The rice industry has a fear of possible curbs on rice exports as well after the wheat export ban, provoking rice traders to step up purchases and place unusual orders for longer-dated deliveries.
But according to the government and trade officials, India has no plans to restrain shipments as of now, the local prices have stayed low, and state warehouses hold ample supplies. India is the world’s biggest exporter of rice.
Of course, this is a welcome decision for import-dependent countries already dealing with rising food costs, but most of India’s rice growing season lies ahead, and any change in prospects for the harvest could alter its stance on exports of the staple grain.
Monsoon rains determine the size of India’s rice crop, and plentiful rains this year would help it maintain its preeminent position in the global rice trade.
Irregular monsoon rains, though, would exploit the crop and cut yields, and that might lead to a drawdown in state inventories that would trigger export curbs to ensure sufficient supplies for the country’s 1.4 billion people.
India is very important for comprehensive rice supply. Its rice exports touched a record 21.5 million 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.
India is the biggest rice consumer after China globally and has a market share of more than 40% of the global rice trade. High domestic stocks and low local prices allowed India to offer rice at deep discounts over the past two years, helping poorer nations, many in Asia and Africa, handle the mounting wheat prices.
So, any reduction in rice shipments would fuel food inflation as India exports rice to more than 150 countries. Grain is a staple for more than 3 billion people, and when India banned exports in 2007, global prices shot to new peaks.
Believe it or not, if India tries to curb exports, it would hit almost every rice-importing country. It would also allow competing suppliers, Thailand and Vietnam, to raise prices that are already more than 30% above Indian shipments.
Other than serving Asian buyers like China, Nepal, Bangladesh, and the Philippines, India also supplies rice to countries such as Togo, Benin, Senegal, and Cameroon.
Also, the monsoon plays a very important role in the rice market. India’s summer-sown rice accounts for more than 85% of the country’s annual production, which jumped to a record 129.66 million tonnes in the crop year. Millions of farmers start planting summer rice in June, when the monsoon lashes India.
The monsoon is vital for water-thirsty rice. Indian farmers rely on monsoon rains to water half of the country’s farmland that lacks irrigation. In 2022, India is forecast to receive an average amount of rainfall. But since June 1, when the four-month monsoon season began, rains are 41% below average.
So, India at present has more than sufficient stocks of rice, and local prices are lower than the state-set prices at which the government buys paddy rice from farmers.
Rice export prices are also trading near the lowest in more than five years. Meanwhile, milled and paddy rice stocks at government granaries of 57.82 million tonnes are more than quadruple a target of 13.54 million tonnes. Unlike for wheat, India did not see a surge in rice exports after Russia’s invasion of Ukraine in February, as the Black Sea region is not a major producer or consumer of rice.