The Ripple Effect: Understanding Which Nation Is Affected The Most Due To India's Ban On Rice Exports

INTRODUCTION

India, often referred to as the "Rice Bowl of the World," has been a significant player in the global rice market for decades. With its abundant rice production and diverse varieties, India has been a major exporter, meeting the demands of countries across the globe. However, in recent times, the Indian government imposed a ban on rice exports, citing domestic food security concerns. This decision has sent shockwaves through the global rice industry and has significant implications for various stakeholders. In this blog, we will explore who is impacted the most by India's rice export ban and the consequences of this decision.

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RICE INDUSTRY OF INDIA (MAJOR IMPORT PARTNERS AND TOTAL TRADE)

Being the top producer and exporter of rice across the globe, India has been in the list of top exporters since many years. To understand better, refer to the table below that shows the total rice exports in the past few years.

Following this, let understand that what all countries imports the most. As per Import Export Data report of India for the year 2022, the major import partners of the nation are as follows:

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WHO IS AFFECTED THE MOST DUE TO INDIA’S BAN ON RICE EXPORTS?

In recent past, the citizens of United States started to flood the grocery stores across the nation in search for rice bags in huge quantities. To control this crowd and bring the situation under control, the United States levied a strict rule on the sale of rice. In few areas of the nation, government implemented “one rice bag per family” deal in order to fulfill the needs of all citizens to some extent.

After this rush and mayhem, India took one of concrete decisions on July 20 that the nation will now onwards not export non-basmati white rice to any country across the globe. This decision was taken by keeping in view the demand of nation’s local demand which is rising every year. Although the ban is not levied on semi/wholly milled rice like basmati or parboiled rice, it will not disturb Global Trade to much extent.

The exported share of non-basmati white rice outperformed the share of basmati rice in the last two monetary years. In financial year 2022-2023, Indian traders exported rice weighing approximately 64 lakh tons non-basmati white rice, whereas they exported nearly 45 lakh tones of basmati rice in the same fiscal year. The most generally exported type was parboiled rice (78 lakh tons). Presently, non-basmati white rice, which shaped over a fourth of semi/completely processed rice, has been taken off the market.

Although multiple nations would be hit hard due to this Indian decision, amongst all, the major impact that would be experienced as per Global Trade Data trends, would be as follows:

• Malaysia, as it imports rice from India the most.
• Singapore, as it fulfills its 30% rice imports needs through Indian exports.
• Djibouti, who imported rice worth USD 158.22 million from India in the year 2022.
• Liberia, a sub-Saharan nation
• Qatar
• The Gambia and Kuwait

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GLOBAL FOOD SECURITY

As one of the most populous countries in the world, India's food security is of utmost importance. The export ban reflects the country's commitment to securing domestic food needs, especially during times of economic challenges, climate uncertainties, or crises. However, the ban also raises concerns about global food security, as it removes a substantial portion of rice supply from the international market. This can further exacerbate food shortages and price volatility, affecting vulnerable populations in countries that rely heavily on rice imports.

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GLOBAL RESPONSE ON THIS DECISION OF INDIA

While India's export ban presents challenges to importing nations, it also opens opportunities for other rice-exporting countries. Competing nations, such as Thailand, Vietnam, Pakistan, and Myanmar, may witness increased demand for their rice exports as buyers seek alternative sources. This could potentially boost the economies of these exporting countries and trade data insights such as Vietnam Export data statistics, and strengthen their positions in the global rice market.

Secondly, the IMF has said it would 'urge' India to eliminate the limitations, which would affect global inflation. Pierre-Olivier Gourinchas, who is known as the Chief Economist of IMF, has expressed that these kinds of limitations are probably going to compound food prices across the globe in different nations. There are reports of Thailand, the second-greatest exporter of rice, that there cost of white rice is increased from USD 35/ton to USD 569/ton last week.

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ANOTHER PROBABLE REASON FOR INDIA’S BAN ON RICE EXPORTS - MONSOON

After looking at the major causes that has pulled down the exports of rice from India to the world, monsoon can also be one of the secondary reasons that also has a major stake in this decision. Let us see that how monsoon can hinder the rice exports from India.

FLOODING: Excessive rainfall during the monsoon can lead to flooding in some regions. This can damage rice crops, reduce yields, and hinder the harvesting process, thereby affecting the overall production and potential exports.

TRANSPORTATION AND INFRASTRUCTURE DISRUPTIONS: Heavy rains and flooding can disrupt transportation networks, making it challenging to move rice from production areas to export ports. This can result in delays and increased transportation costs.

QUALITY ISSUES: Monsoon rains can lead to excess moisture content in rice grains, affecting their quality and shelf life. This can be a concern for exporting to markets with stringent quality standards.

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CONCLUSION

India's decision to impose a rice export ban has far-reaching implications on various stakeholders. While the measure seeks to address domestic food security concerns, it also disrupts global rice supply chains and raises worries about food security in importing nations. Indian farmers and international traders are forced to adapt to the changing dynamics, while competing rice-exporting nations may experience newfound opportunities.

As the global rice market evolves in response to India's ban, it becomes essential for all stakeholders to collaborate and explore sustainable solutions to ensure food security, stability, and equitable access to this essential staple crop on a global scale. Additionally, policymakers must carefully consider the implications of export bans and implement measures that strike a balance between national food security and responsible global trade.

To learn more about the trade insights and datasets of 70+ nations, get in touch with TradeImeX today and get answers to all your questions with concrete solutions. Hurry! And start building your international trade strategy and expand your market across the globe.

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