The country announced the decision on Friday, aimed at safeguarding its population’s consumption as stock market prices have risen in recent weeks.
A verdict with global consequences. India has halted its exports of non-Basmati white rice “effective immediately,” the Ministry of Consumer Affairs and Food said in a statement on Thursday (July 20). In a context where the price of rice has already increased, this decision could aggravate the situation even more. Franceinfo answers four questions about India’s election.
1Why did India decide to halt its exports?
The Indian government is pursuing two goals. On the one hand, it is about “guaranteeing” a “sufficient” supply for local consumers. In the second quarter of 2023, Indian non-Basmati white rice exports increased by 35% year-on-year, the statement said.
On the other hand, the ministry wants to use it to “soften price increases in the domestic market” while “retail prices have risen by 11.5% in one year and by 3% in the last few months”. The country exported 10.3 million tons of non-Basmati white rice last year, according to AFP.
India’s non-basmati white rice exports account for about a quarter of India’s total rice exports, the news outlet adds. According to a statement from the French Ministry of Agriculture (PDF), India is a heavyweight in the market as it accounts for almost 38% of global rice exports, followed by Thailand and Vietnam (14%).
2Why is the price of rice rising?
New Delhi cites the “geopolitical context”, especially the war in Ukraine, and the “extreme climate phenomena”, especially El Niño. The weather phenomenon, characterized by above-average surface temperatures in the equatorial Pacific, has led to significant rainfall deficits in Southeast Asian countries, while rice cultivation is particularly water-intensive.
In the case of India, after a period of drought at the beginning of the year, severe crop damage was caused by flooding in July. “The combined effect of these two phenomena is leading to a decline in Indian production,” points out Thierry Pouch, an economist at the University of Reims Champagne-Ardenne, to franceinfo. According to the researcher, however, this decline should be limited: “According to estimates, it will drop to 136 million tons in 2023 and to almost 135 million tons in 2024.”
Speculation is another reason for the price hike, according to Patricio Mendez Del Villa, an economist at the Center for International Cooperation in Agricultural Research for Development. “Importing countries are trying to replenish their inventories, and exporting countries take advantage of this to inflate the bill,” he analyzes in Le Figaro.
3What are the consequences for the world market?
India’s decision will lead to an “inevitable” price hike in international markets, which has already taken place in recent months. “After a price drop in July 2022, we are witnessing an unprecedented trend reversal,” notes Thierry Pouch. “The price of rice per ton is $513 [461 euros] in July 2023, while in May and June we were at $470 a ton [422 euros]. This is exactly the same level as in 2008, at the time of the economic and financial crisis.”
There is also a risk that this export ban will cost the countries most dependent on them dearly. Thierry Pouch fears that this will “put importing countries like Benin, Senegal, Turkey or Lebanon in great financial difficulties”. In such states, there is a “risk of worsening food insecurity,” warned the company Gro Intelligence, which analyzes data on raw materials, in a statement quoted by AFP.
According to the economist, Russia should take advantage of this situation, while Moscow decided to suspend the agreement on Ukrainian grain. “With such high prices, Russia will be able to offer its grain production for sale.” [autres que le riz] at a much cheaper price.
4Will the price of rice rise in French supermarkets?
Yes, but not “immediately”, specifies Thierry Pouch. “The contracts with the dealers were concluded at previous prices. If the contracts have to be renewed, prices will rise.” He predicts a price increase “by autumn”. According to a study by Nielsen IQ for franceinfo, in March 2023, rice was already among the top five products with a 25% increase in one year. The 500 g pack therefore cost 1.67 euros.
In France, rice is mostly imported from Asia, but relatively little from India (21,180 tons in 2021/2022), far from Cambodia (83,409) and Thailand (76,191). However, according to the French Ministry of Agriculture, Italy remains the main supplier (128,262 tons).