India, the world’s largest rice exporter, could ban exports amid sub-par sowing this season, Nomura said on August 30.
“Will India ban rice exports? We think the risk is non-negligible,” Sonal Varma, Nomura's chief economist for India and Asia (excluding Japan), said in a note.
“Following the Russia-Ukraine war, soaring maize prices prompted a shift towards using broken rice as animal feed, with rising feed costs adding to higher meat prices. India’s rice production this season may also be lower.”
The government is discussing curbs on broken rice exports, as local prices soar, Bloomberg reported August 26, citing unnamed people. Talks were in advanced stages, according to the report.
Russia’s invasion of Ukraine has roiled global food markets. India in May banned wheat exports amid concerns over domestic output being hit by scorching heat waves in Punjab, Haryana and Uttar Pradesh. It also restricted wheat flour exports on August 25.
India accounts for nearly 40 percent of global rice exports.
The wheat effect
Sowing during the ongoing summer season has been 6 percent lower from last year due to deficient rains in some key rice-growing states, pushing up rice prices, Nomura said.
While the government has ample rice buffer stocks, lower wheat procurement has already prompted a higher allocation of rice under its free food grain scheme. This means a likely drawdown of rice buffers and higher local rice prices in coming months, in our view, it added.
The country supplies subsidised food grains to the poor under its public distribution system and has also been providing free wheat and rice to the poor since the pandemic hit.
India has replaced 5.5 million tonne of wheat with rice in Pradhan Mantri Garib Kalyan Yojana, while 6.1 million tonne of wheat have been replaced by rice under the National Food Security Act.
India banning rice exports could have a material impact on Asia, Nomura said.
World rice exports, at 52.6 million tonnes in the latest season, equated to only 10.3 percent of total rice production. Therefore, restriction by anyone exporter could have an outsized impact on global rice markets.“Rice is a staple food in Asia, so a sharp rise in rice prices would have a much larger impact on consumers in Asia than higher wheat prices,” Nomura said.