Top rice exporter India bans most shipments as late monsoon hits crop
Summary Ban on most rice exports after retail prices rise
India accounts for 40% of global rice exports
Rice export group compares impact to Ukraine war
Rice a staple for 3 billion people
NEW DELHI, July 20 (Reuters) - India has banned the export of non-basmati white rice with immediate effect, the world's top rice exporter said on Thursday, in a move one export group said could have an impact comparable to that of the Ukraine war on wheat supplies.
The government said it was imposing the ban after retail rice prices climbed 3% in a month as late monsoon rains damaged crops. While a late monsoon caused a major shortfall of rain up to mid-June, heavy rains since have caused significant damage.
India accounts for more than 40% of world rice exports but low inventories mean any cut in shipments will fuel food prices driven up by Russia's invasion of Ukraine last year and erratic weather.
"In order to ensure adequate availability of non-basmati white rice in the Indian market and to allay the rise in prices in the domestic market, the government of India has amended the export policy," the government said in a statement that said retail prices were up 11.5% in 12 months.
The move demonstrates the sensitivity of the government of Prime Minister Narendra Modi to food inflation ahead of a general election nearly next year.
His administration has extended a ban on wheat exports after curbing rice shipments in September 2022. It also capped sugar exports this year as cane yields dropped.
"India would disrupt the global rice market with far greater velocity than Ukraine did in the wheat market with Russia's invasion," B.V. Krishna Rao, president of the Rice Exporters Association told Reuters.
Rice is a staple for more than 3 billion people, and nearly 90% of the water-intensive crop is produced in Asia, where the El Nino weather pattern usually brings lower rainfall. Global prices are already hovering at their highest level in 11 years.
"The sudden ban on exports would be very painful for the buyers, who can't replace the shipments from any other country," Rao said.
While Thailand and Vietnam don't have enough inventories to plug the shortfall, African buyers would be most affected by India's decision, Rao said, adding that many countries will urge New Delhi to resume shipments.
WEATHER DAMAGE
Heavy rain in northern parts of India over the last few weeks has damaged newly planted crops in states including Punjab and Haryana, and many farmers have had to replant.
Rice paddy fields in northern states have been submerged for over a week, destroying newly planted seedlings, and forcing farmers to wait for waters to recede so they can replant.
In other major rice-growing states, including West Bengal, Bihar, Chhattisgarh, Andhra Pradesh and Telangana, farmers have prepared paddy nurseries but have been unable to transplant the seedlings due to inadequate rainfall.
The area under rice cultivation had been expected to increase after New Delhi raised the rice purchase price, but industry officials now estimate a marginal decrease. Farmers so far have planted rice paddy on an area 6% smaller than in 2022.
This week, prices of rice exported from Vietnam, the world's third-largest exporter after India and Thailand, soared to their highest in more than a decade on growing supply concerns due to El Nino.
Vietnam's 5% broken rice was offered at $515-$525 per metric ton - its highest since 2011. India's 5% broken parboiled variety hovered near a five-year peak at $421-$428 per metric ton.
Buyers may move to Thailand and Vietnam, but their 5% broken rice could cost $600 per metric ton, said one European trader.
China and the Philippines, who generally buy Vietnamese and Thai rice, will be forced to pay substantially higher prices, another European dealer said.
Additional reporting by Michael Hogan in Hamburg; Editing by Jan Harvey, David Evans and Conor Humphries
Our Standards: The Thomson Reuters Trust Principles.
Source: Reuters
