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Tuesday, February 27, 2024

Indian Rice Export Ban Raises Fears of Copycat Restrictions

India’s rice export ban has triggered concerns of a potential cascade of similar actions among rival suppliers, aimed at preventing domestic shortages. This move by India, which aims to fill a 10 million metric ton gap in the market, is exacerbating worries over global food inflation, which is already high.

Analysts note that India’s current restrictions closely resemble those imposed in 2007 and 2008, causing a chain reaction as other nations also curtailed exports to safeguard local needs.

This time, the impact could be more far-reaching due to India’s increased dominance in the global rice trade, accounting for over 40% compared to around 22% fifteen years ago. This puts pressure on rice-exporting countries like Thailand and Vietnam to take similar measures.

The swift effect on rice prices, reaching 15-year highs, stems from India’s surprise ban on non-basmati white rice sales. The potential for limited supplies raises concerns about further price spikes, impacting vulnerable consumers in Asia and Africa.

The already tight supplies due to weather disruptions and shipping issues in the Black Sea are compounding the situation.

According to Nitin Gupta of Olam Agri India, exporting countries such as Thailand and Vietnam may ramp up their efforts to bridge India’s supply gap, but capacity constraints could lead to price surges in other regions.

This situation draws parallels to the significant price rally seen in 2007/08 when multiple nations restricted exports, resulting in record high rice prices exceeding $1,000 per ton.

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