Global rice prices surge as India bans non-basmati rice exports

The international rice market has been sent reeling as global prices soar to a nearly 12-year high, triggered by India's recent decision to ban the export of all non-parboiled non-basmati rice.

The United Nations’ Food and Agriculture Organization’s All-Rice Price Index, with a base year value of 100 for 2014-2016, surged to 129.7 points in July 2023. This marks a staggering 19.6% increase from the previous year and the highest level since September 2011.

Particularly affected is the Indica Index, which represents rice varieties grown in the subcontinent. It has skyrocketed by 24.4% year-on-year, reaching 135.4 points in July. The ban, which came into effect on July 20, covers all non-basmati white rice.

This category accounted for 9.94 million tonnes out of India's total rice exports of 22.35 million tonnes in the 2022-23 fiscal year.

While wheat is a less thinly traded global commodity, the ban on rice exports has had a more pronounced impact. Global rice trade for 2022-23 stood at only 55.65 million tonnes, with India contributing a significant 40.4% share at 22.5 million tonnes.

Other major rice-exporting nations like Thailand, Vietnam, and Pakistan collectively struggle to fill the void left by India's decision, with a combined export capacity well below the banned quantity.

India's move to limit rice exports follows concerns about dwindling government stocks, including wheat, and soaring annual retail cereal inflation of 12.7% in June. Furthermore, fears of potential crop-damaging effects from El Niño have added urgency to the government's decision, which aligns with upcoming elections scheduled for April-May 2024.