The world's largest rice exporter is considering tightening sales to lower domestic prices, even though this could push up global prices.
Bloomberg reported that the Indian government is discussing a plan to ban all non-Basmati rice exports, citing rising domestic prices and an effort to curb inflation. Retail rice prices in Delhi have risen 15% this year, while the national average has risen 8%, according to data from the Indian Food Ministry.
If implemented, the ban would affect 80% of India’s rice exports. The move could cool domestic prices but would push up global rice prices. Rice is a staple food for half the world’s population, with Asia consuming 90% of the global supply. Prices in the region have already hit a two-year high amid concerns that El Nino could affect crops.
India's consumer price index (CPI) accelerated last month, driven largely by high food prices. India's inflation is expected to continue rising as the price of tomatoes - a staple in the country - has surged 341% this year, according to data from the Ministry of Consumer Affairs.
India accounts for about 40% of the global rice trade. Last year, it banned exports of broken rice and imposed a 20% tariff on white and brown rice as the Russia-Ukraine conflict pushed up prices of staples like corn and wheat. It also restricted exports of sugar and wheat.
India supplies rice to more than 100 countries. China, Senegal and Ivory Coast are its biggest customers. Following the news, shares of India’s largest rice exporters fell across the board today. The current decline is around 2-4%.
Importers such as Indonesia, China and the Philippines are stockpiling rice. The World Meteorological Organization (WMO) said El Nino has developed in the tropical Pacific for the first time in seven years, causing drought in many rice-growing areas. India’s ban will add to supply concerns.
Ha Thu (according to Bloomberg)
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