Rice crisis: Export ban causes panic

Published: 02/08/2023

India’s move to ban certain rice exports has sparked some panic buying in various countries, with videos on social media showing bags of the staple food flying off the shelves and long lines outside grocery stores.
The ban comes after India’s government earlier expressed concern over inflation ahead of its upcoming elections. According to Wandile Sihlobo of Agbiz, the problem with this view is that India faces far less inflation pressure than other regions. In June 2023, the country’s annual consumer inflation was 4,8%, down significantly from the start of the year when inflation was 6,5% in January 2023. Food inflation has moderated at roughly the same pace, measured at 4,5% in June 2023, down from 5,9% in January.
Importantly, India is a significant global rice producer, accounting for a 26% share in the expected 2023/24 global rice production of 525 million tons, according to data from the International Grains Council (IGC). Of the 50 million tons of rice for global exports projected for the 2023/24 season, India is expected to account for approximately 40%. Other notable rice exporters are Pakistan, Thailand, the US, Vietnam, China, Cambodia and Myanmar. However, India remains the largest exporter. The ban can there lead to major disruptions in the global rice trade and upside pressure on prices.
At the end of June 2023, global rice prices softened from the surge in May as global production prospects improved. This was a positive decline for an already declining global agricultural commodities basket from the peak levels seen after Russia invaded Ukraine in March 2022. – Wandile Sihlobo, Agbiz