India's ban on food exports could be tightened again. Heavy rains have damaged key crops such as rice, which is sown during the summer, threatening to fuel inflation in India, which in turn has prompted New Delhi to impose more restrictions on exports of rice, wheat and other grains. In September, the Indian government imposed a ban on the export of broken rice for livestock and poultry farming and imposed a 20 percent tariff on rice exports except basmati rice. Combined with India's ban on wheat exports at the beginning of the year and the rise of global geopolitical risks, as the world's largest exporter of rice, India's rice ban may trigger a further rise in global food prices and stimulate the nerves of global food security. What changes will India's latest rice ban bring to global food prices? Is China affected?
After exports increased by 4,178%
India's "Coinage newspaper" reported that the Indian government recently said that India may reduce rice production by 10 million to 12 million tons this year, for domestic food security considerations, the Indian government has tightened food exports. According to Indian official data, the price of broken rice in India has soared by 38% this year, and exports have also risen. According to the website of India's Business Standard newspaper, from April to August this year, India's broken rice exports increased by 4,178% compared with the same period in 2019.
"Coinage" said that in addition to the heavy rainfall, parts of India's growing areas also suffered from hot and dry weather in the summer, and the monsoon rainfall was about 40% lower than the average level, resulting in an 8% reduction in rice planting area. India's total rice production for FY2021-2022 is estimated at 130 million tonnes, of which 111 million tonnes will be produced during the rainy season from June to September. Coupled with high temperatures, India's wheat production was reduced by more than 15%, and India had to implement a rice export ban to replace the reduced wheat with rice. It is reported that India this time to restrict the export of rice is mainly broken rice. Although broken rice is not a main feed like soybeans, it can also be used as a feed substitute, and India needs to ensure the supply of feed for the country's more economically valuable livestock industry.
Wang Yongzhong, director of the International Commodities Research Office at the Institute of World Economics and Politics of the Chinese Academy of Social Sciences and a national global strategic think tank, told the Global Times that fertilizer prices, weather and geopolitics led to India's rice ban. Rice prices in India have been relatively stable, compared to the often volatile prices of wheat, corn and soybeans. But this year, global fertilizer prices are at record highs, raising the cost of growing rice. Especially since the conflict between Russia and Ukraine, the export of Russia and Belarus, the two major exporters of potash fertilizer, has been blocked, resulting in a continuous rise in fertilizer prices.
The Nikkei Chinese website reported that "India, the largest rice exporter, began to 'stockpile food'" under the title of the supply chain chaos caused by the epidemic and the situation between Russia and Ukraine, the international price of rice is rising, but India pays more attention to domestic supply. India has already restricted exports of wheat and sugar, and global food prices may come under fresh upward pressure.
Will Vietnam and Thailand benefit?
According to the CNBC website, India's rice exports account for about 40% of the global rice trade and are exported to more than 150 countries and regions. India's rice ban has sparked global concern and nervousness over a further rise in global food prices.
The latest report from Nomura Securities in Japan and the CNBC website in the United States believe that the impact of India's rice export ban on Asian countries is different, of which Indonesia and the Philippines have been the biggest impact. The Philippines, which imports 20 percent of its rice consumption, is the country most affected by the ban, according to a recent report by Nomura Securities.
However, some countries stand to benefit from India's rice export ban, notably Thailand and Vietnam. The two countries, the world's second and third largest rice exporters, will fill the market gap left by India. In 2021, Vietnam produced 44 million tons of rice, with exports bringing in $3.133 billion. Thailand will produce 21.4 million tons of rice in 2021. Traders said buyers were trying to secure supplies from India's rivals Thailand, Vietnam and Myanmar as Indian exporters stopped signing new contracts, Reuters reported.
According to a Mumbai-based distributor of a global trading company, India has been the cheapest supplier of rice, which has partly protected African countries such as Nigeria, Benin and Cameroon from rising wheat and maize prices. Wang Yongzhong believes that after the export ban and the imposition of export taxes, India's rice export costs will increase, which will promote the rise of rice prices in the international market and increase the burden of low-income countries.
How much impact on China
The website of the Business Standard Newspaper recently reported that India exported 3.8 million to 3.9 million tons of crushed rice in the 2021-2022 fiscal year, of which 1.6 million tons were exported to China. Nevertheless, Wang Yongzhong believes that India's rice ban will have little impact on China, "China's grain reserves are sufficient, broken rice substitute and strong, the impact on China is minimal."
Regarding the Indian rice export ban, Jiang Sanqiao, deputy general manager of Anhui Quanyin High-tech Seed Industry Co., LTD. (referred to as "Quanyin High-tech"), told the Global Times reporter that the ban has little impact on China. China is now basically self-sufficient in grain and has absolute food security. The reason for importing Indian broken rice, Jiang Sanqiao explained that China has quotas on rice imports, but there are no quotas on broken rice. Broken rice can be added to feed to supplement the lack of domestic corn supply, and can also be made into rice noodles, river snails, rice noodles and other products to meet the needs of the domestic market.
It is also the autumn harvest season in China. The latest agricultural situation dispatch of China's Ministry of Agriculture and Rural Affairs shows that the country's autumn harvest progress is more than half, and the harvest has entered the peak period. Jiang Sanqiao told reporters that from Anhui province, wheat mainly summer grain production increased, autumn grain although affected by this summer's drought, high temperature, but the overall output can be the same as last year. He concluded that the main reasons for the harvest of autumn grain are: first, governments at all levels have done a lot of work this year to organize and coordinate water-saving, water transfer and other drought-fighting work to ensure the grain harvest; Second, some of China's top seed enterprises have been engaged in the research and development of heat and drought tolerant seeds for many years, and these high-quality seeds have played a great role in ensuring this year's rice production.
Source: Global Times
