Prohibition of India’s rice export: The Asian countries began to be hit hard

  • 19-Sep-2022
  • Prohibition of India’s rice export: The Asian countries began to be hit hard

India, the world’s enormous rice exporter, has prohibited shipments of broken rice — a move that will reverberate across Asia, according to Nomura.

In a bid to control domestic prices, the government restricted exports of broken rice and slapped a 20% export tax on several types of rice starting Sept. 9. Nomura expressed the impact on Asia will be uneven, and the Philippines and Indonesia will be most vulnerable to the prohibition. 

India accounts for around 40% of global rice shipments, exporting to more than 150 countries. Further, the Exports reached 21.5 million tons in 2021. That’s more than the total shipment from the next four biggest exporters of the grain. But production has declined by 5.6% year-on-year as of Sept 2. In light of below-average monsoon rainfall, which impacted harvest, Nomura said.

For India, July and August are the “most important” months for rainfall, as they determine how much rice is sown, expressed Sonal Varma, the chief economist at the financial services firm. This year, irregular monsoon rain patterns during those months have declined production, she added.

Big rice-producing Indian states such as West Bengal, Bihar, and Uttar Pradesh are acquiring 30% to 40% less rainfall, Varma expressed. Although rainfall improved toward the end of August, “the more delayed the sowing [of rice] is, the greater is the chance that yield will be lower.”

The impact of a rice export ban by India would be felt both instantly by countries that import from India and also indirectly by all rice importers, because of its effect on global rice prices,” according to a report by Nomura released recently.

With the growth in exports and India’s ban putting upward pressure on rice prices, the overall value of rice exports will increase and these two countries will benefit from it.

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