The sharp rise in prices for this everyday staple began last year when Prime Minister Narendra Modi’s Indian government imposed restrictions on the export of split rice – a cheap variety imported mainly from poorer countries, from Bangladesh to Benin, according to the FT. Since then, however, there has been no sign of any relaxation in the price of these foods for hundreds of millions, if not billions of people.
The Delhi government recently announced a minimum price for basmati rice exports. Basmati rice, which costs less than 1,200 dollars (1,110 euros) per ton, can no longer be exported for now, as the “Hindustan Times” reported at the end of August. And a 20% tariff on parboiled rice will also be extended until March, he said.
AP/Anupam Nath A man harvesting rice in India
Waiting for additional income
“It’s difficult when a country that accounts for 40 percent of world trade imposes a ban on half of its exports and tariffs on the other half,” said Joseph Glauber of the International Food Policy Research Institute (IFPRI) food security think tank. ). , former chief economist at the U.S. Department of Agriculture.
However, now that India’s rice harvest is underway, importing countries dependent on India are hoping for higher-than-expected yields and that these possible but unlikely additional returns could prompt the Indian government to ease its restrictions.
Food prices as Modi’s electoral sweetener
Indian domestic politics, in particular, could quickly dampen this hope, as elections are imminent in the country. Rising food prices have been a politically sensitive issue in India for decades, and rice is particularly important. It is the most consumed staple food. Modi and his Bharatiya Janata Party have made controlling food prices a priority. They are a central theme of his policy – even in the long term – and should also be one of the incentives for the re-election of the government by the population, as the “FT” wrote.
AP/Manish Swarup Indian Prime Minister Narendra Modi (center) with members of his cabinet during a speech in mid-September
According to the Indian government, cereal prices increased by 11.5 percent in the year before the export ban was introduced, and exports also increased sharply in the same period, according to the FT. Prices of other Indian staples such as tomatoes and onions have now risen in recent months as the volatile monsoon season has hit agricultural production, the newspaper added.
“Additional precautions are being taken as elections approach in some states and a national election next year,” Avinash Kishore of IFPRI in New Delhi told the FT. But other factors also influence food security, such as rising global oil prices. Indian politics must also address this issue before the elections.
2008: Domino effect tripled prices
People are already thinking about next year’s harvest. The El Niño climate phenomenon, associated with heat and drought in the Pacific Ocean, also threatens to affect production next year because growing conditions may be too dry, according to vague initial forecasts.
Analysts and experts warn that if India maintains current restrictions and other rice producers follow its example, the world will be heading towards a repeat of the 2008 rice crisis, says the FT. At that time, a kind of domino effect of protectionist measures followed. In six months, the price of rice tripled and spurred inflation across the world. The unrest was the result in South Asia, the Caribbean and North Africa, where the rice crisis is considered one of the causes of the Arab Spring that began three years later, the newspaper continued.
AP/Zahid Hussain Extreme weather also leads to rice harvest failures
Rice production is stagnant due to the climate crisis
However, a rice crisis could now be even worse, the paper said, and also cited reasons for this: increased demand due to population growth, coupled with the effects of increasingly extreme weather due to the climate crisis. Furthermore, the global food situation has long been tense due to Russia’s war of aggression in Ukraine, which has driven up grain prices.
After decades of rapid crop growth thanks to the development of new rice varieties, yields in the main rice-producing countries of Southeast Asia are stagnant, according to a study in the specialized journal Nature Food, cited by the FT. Global crop growth increased by an average of 0.9 percent per year between 2011 and 2021, slowing down from 1.2 percent per year between 2001 and 2011, UN0 data also shows.
The main reason for this is the climate crisis. Because rice grows in hot climates — 90% of the world’s rice is produced in Asia — it’s often assumed that a few more degrees won’t make a difference, according to climate researcher Bjoern Ole Sander of the International Rice Research Institute ( IRRI), based in Thailand. ). However, this is not the case. At certain temperatures, rice production decreases, says Sander. The grain is also particularly sensitive to nighttime heat.
WFP: Poorest countries victims of India’s rice policy
The current development is also reinforced by the fact that prices outside India are also rising. For example, benchmark prices in Thailand and Vietnam, the world’s second and third largest rice exporters, have increased by 14 and 22 percent, respectively, since India imposed its ban. In Nigeria, the price of rice rose 46.34 percent in August compared to last year, according to the latest data from the country’s statistics agency, according to the FT.
APA/AFP/Chaideer Mahyuddin A warehouse full of bags of rice
Poorer countries, in particular, are the victims of India’s rice policy, according to the United Nations World Food Program (WFP). In Togo, for example, almost 88 percent of all rice imports came from India in 2022, while in Benin, the world’s largest importer of broken Indian rice, the figure was 61 percent.
Arif Husain, chief economist at the UN World Food Programme, pointed out that the countries likely to be hardest hit already suffer from a range of other problems: high food prices, mounting debt and increasingly weak currencies. Rice as a staple food is no longer accessible to millions and millions of families, Husain continued.
Are rice export bans just the beginning?
The Indian government strongly defended the ban as a necessary step to protect domestic food security in a context of worrying inflation and poor harvests. The topic of agriculture and climate is becoming increasingly important in the face of the climate crisis. Given increasingly uncertain harvest results, current export restrictions could be just the beginning of global competition for cheap staple foods, according to experts.
The fear of an international crisis is great: other Asian countries have already followed India’s example. In late August, Myanmar, the world’s fifth-largest rice exporter, announced it would ban cereal exports for “approximately 45 days”. A few days later, the Philippines introduced a price cap on rice to curb rising consumer costs. However, the price cap was lifted again in early October.
IMF: India’s “harmful step”
India’s move drew criticism from around the world. The International Monetary Fund (IMF) called on the New Delhi government to reverse the “harmful” move, and the US and other World Trade Organization countries questioned the need for restrictions on India’s public reserves after enough, wrote the “FT ”.
Other critics argue that the export ban will harm India’s reputation as a reliable global trading partner. Under Modi, India has tried to establish itself as a global economic power – at least in production and trade – by expanding trade relations and negotiating free trade agreements with other major economies.