India accounts for 40% of global rice trade, and restricting exports will deal a further blow to countries grappling with a cost-of-living crisis and worsening hunger. It will have implications for the billions of people that depend on the staple, with about 90% of the world’s rice grown and consumed in Asia.
Unlike wheat and corn prices, which surged after Russia’s invasion of Ukraine, rice has been subdued due to ample stockpiles, warding off a bigger food crisis. Back in 2008, prices soared above $1,000 a ton, more than double the level now, as India and Vietnam banned exports, causing panic over supplies.
Broken rice is mainly used for animal feed or to produce ethanol in India. Prices have jumped this year on increased export demand. Top buyers include China, which uses it mostly for livestock feed, and some African countries, which import the grain for food.
Shares of Indian rice producers and exporters tumbled on expectations of the curbs. KRBL Ltd, one of the biggest shippers, sank as much as 8.8%. LT Foods Ltd declined about 7.5%, while Chaman Lal Setia Exports Ltd fell 3%.
India has already restricted wheat and sugar exports, sending shock waves through global markets as it signalled an escalation in food protectionism that’s seen countries choke off flows of locally-grown supplies to the world. That helped to send world prices for kitchen staples to fresh records, although they have declined recently as the outlook for global crops improved.
The potential curbs on rice come as planting has shrunk 8% this season due to a lack of rainfall in some areas. Monsoon showers have been about 40% less than average in the major growing states of Uttar Pradesh and Bihar. Overall, the country has received 9% above normal precipitation during the period.