India, the world’s largest rice exporter, is considering a ban on most types, which could push up already-high worldwide prices when the disruptive El Nio weather pattern returns.
According to those acquainted with the situation, the government is considering a ban on all non-Basmati rice exports.

This is due to growing domestic prices, and authorities want to avoid more inflation, according to the persons, who asked not to be identified because the information is not public.
A prohibition, if enacted, would affect almost 80% of India’s rice exports. While such a move may cut domestic pricing, it also increases worldwide costs. Rice is a staple for about half of the world’s population, with Asia consuming about 90% of global supply. Benchmark prices have already soared to a two-year high on fears that the return of El Niño will damage crops.

India accounts for over 40% of global rice trade and has sought to restrict shipments of some types. After Russia’s invasion of Ukraine pushed food staples like wheat and corn prices skyrocketing, the South Asian nation banned broken rice exports and put a 20% levy on shipments of white and brown rice last year. Wheat and sugar shipments have also been banned.

Representatives from the food, trade, and finance ministries did not reply to requests for comment via email or text message. India exports rice to about 100 nations, the most important of which being Benin, China, Senegal, Cote d’Ivoire, and Togo.

On hearing of the prospective ban, shares of Indian rice millers plummeted. KRBL Ltd., the country’s largest rice company, fell 3.7% before cutting losses. Chaman Lal Setia Exports Ltd. fell as much as 1.4%, Kohinoor Foods Ltd. down 2.9%, and LT Foods Ltd. fell 4.4%.

This year, importers such as Indonesia, China, and the Philippines have been aggressively storing rice. According to the World Meteorological Organisation, El Nio conditions have arisen in the tropical Pacific for the first time in seven years, threatening to cause drought in several rice-growing countries. A prospective embargo by India will exacerbate supply concerns.

India’s plan comes as consumer price inflation accelerated in June, owing primarily to higher food prices. Bloomberg Economics predicts that inflation would rise further following the recent climb in tomato prices, a vital ingredient in Indian cuisine, and an increase in the government’s support price for monsoon-sown crops. Inflation estimates have been boosted by Barclays Bank Plc and Yes Bank.

According to food ministry data, retail rice prices in Delhi have risen roughly 15% this year, while the national average has risen 8%. Persistently high food prices may sour public opinion ahead of multiple state elections later this year and a national election in 2024.

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