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| Can Pakistan benefit from India's ban on rice exports? |
"Last Friday I got to know from friends that there was a shortage of rice in the nearby stores. I thought it was a rumor because I knew that rice production in India has been good, so it can't be."
But then messages started coming on WhatsApp from friends and relatives that rice and flour were not available. Later, when I went to the shop, I saw that the rack where the rice and flour were kept was empty.
Krishna B Kumar, who has been living in Dallas for the past 12 years, says he has never seen such a situation.
He says that 'neither rice nor flour is available and where it is available two to three times more price is being charged.'
On July 20, the Indian government imposed an immediate ban on the export of non-basmati white rice, the country's largest rice export category.
It is said that this decision has been taken to control the rising demand and prices of rice.
It should be noted that India is the largest exporter of rice in the world and due to this decision, the price of rice in the world market is likely to increase.
Why India had to take this step?
According to the Indian government, the price of rice in the domestic market is continuously increasing. Rice prices have seen an increase of 11.5 percent in a year, compared to a 3 percent increase in the last month alone.
To reduce the price of rice in the domestic market and ensure the availability of rice, the government imposed a 20% export duty on the export of non-basmati white rice on August 8 last year. Despite this, there was an increase in the export of white rice.
White rice exports increased from 33.66 lakh tonnes in March 2021-2022 to 42.12 lakh tonnes in 2022-2023 (September-March).
Exports of white rice in the current financial year 2023-24 (April-June) were around 15.54 lakh tonnes, which is 35% higher than the previous year 2022-23 (April-June).
The government believes that the reason for this rapid increase in this type of rice export is the changing geopolitical scenario around the world, El Nino, and changing weather conditions in rice-producing countries.
However, India has not imposed any ban on the export of basmati rice.
Speaking to the BBC, Rajeev Kumar, Executive Director of the Rice Association of India, said that the price of rice at the national level has decreased by Rs 4 per kg, so the government's efforts to reduce the price of rice. have come in handy.'
But at the same time, Thailand and Vietnam have increased rice prices by 10 percent. This will affect global food prices. Our main competition is with Thailand and Vietnam.
So are the prices of rice in the world market really rising?
What did the IMF say?
The International Monetary Fund (IMF) has said that India's ban on rice exports could have an impact on global food inflation.
IMF Chief Economist Pierre Olivier has said that "We will ask the Indian government to remove the restrictions on rice exports because of the impact this may have on the world."
He also said that India's decision will have the same effect as banning Ukraine's exports, which has increased wheat prices in other countries. This will affect prices globally this year.
This week, the price of rice exported from Vietnam reached the highest level in the last decade. After India and Thailand, Vietnam is the third largest exporter of rice in the world.
Rajeev Kumar says, “I think it is better for farmers if there is more demand for their products. When you ban exports, obviously the demand for their products is less. Farmers will not get much price, secondly, exporters will be directly affected by this decision, as it is their livelihood.
He said that India supplies rice to 165 countries of the world, which is the result of the hard work of rice traders. Due to them, the demand for Indian rice has increased worldwide. If we look at global trade, India has a 42% share of the global market. If this restriction continues for a long time, we may lose this market. India is a major player in this market and if it pulls back, obviously the prices will go up all over the world.
Rajeev Kumar also says that China and the Philippines, which usually buy rice from Thailand and Vietnam, will have to buy rice at an inflated price.
Vijay Setia, former president of All India Rice Association, also expressed concern over the ban while talking to BBC. They believe that this ban will damage India's reputation.
He said that this ban will damage the image of India. In the countries where Indian rice goes, prices may increase and this will benefit countries like Vietnam, Pakistan, and Thailand as their rice will be sold at a higher price.
The global trade consists of about 45 million tonnes of rice exports, of which India's share is 22 million tonnes. It includes both basmati and non-basmati rice. If you cut 18 million tonnes out of that, imagine what the impact would be on the international market.
What is Pakistan? Who can benefit from India's ban?
Pakistan is also one of the major rice exporting countries, but compared to India, Pakistan's exports are less.
Pakistan Rice Exporters Association Senior Vice Chairman Haseeb Ali Khan told BBC Urdu's Zubair Azam that Pakistan exported 4.5 million tonnes of rice in the fiscal year 2021-2022, of which 3.7 million tonnes were non-basmati rice.
This year, Pakistan earned $2.64 billion in foreign exchange from the export of rice, but in the fiscal year 2022-2023, Pakistan's exports decreased and a total of 3.1 million tons of non-basmati rice was exported and $2.1 billion in foreign exchange. Earned.
The reason for this shortfall, according to Haseeb Ali Khan, was a series of rains and floods. According to him, another reason was the export of almost three lakh tons of rice to Iran and Afghanistan, which was not documented.
Another reason was the lack of agricultural area for rice cultivation, however, they say that India's ban on the export of white rice could benefit Pakistan.
"The weather conditions have been better this year and if we do not face the flood situation, we are hoping that Pakistan will set a new record for rice export this time."
He said that according to conservative estimates, six million acres of rice have been cultivated this year.
However, he said that it will also depend on how long the ban imposed by India lasts. At present, according to our information, the ban has been imposed till August 30.
"Our harvest starts at the end of August."
Haseeb Ali Khan said that there is a tendency to increase the price of rice in the current financial year. Last year, the rate of rice was 370 dollars per ton, while this year the rate is going to be around 500 dollars.
Due to the ban imposed by India on the global market, there is a panic in buying and so far a dealer from Indonesia has booked an advance order of 30 thousand tons of rice.
Fear of hoarding
On the other hand, after this decision in India last week, long queues of people of Indian origin were seen at Indian grocery stores in America.
Some videos have also surfaced on social media in which people are seen robbing rice at department stores in the United States.
According to a report by the Economic Times, people of Indian origin living in the US are buying more rice due to the fear of a shortage of rice in the market.
According to The Hindu newspaper, other vendors in major US cities such as Texas, Michigan, and New Jersey have also seen queues outside Indian grocery stores to limit the sale of rice, and many stores have made it a rule that a customer Only one bag of rice can buy.
Effect of Russia-Ukraine Treaty
Concerns about grain exports from the Black Sea have been raised since the start of the Ukraine war, but despite the war, Russia and Ukraine signed an agreement last year for safe grain exports from the Black Sea.
The agreement has been renewed three times since it came into force in July last year.
Under the agreement, cargo ships were allowed to sail from Ukrainian ports to the Black Sea, but now the situation has changed.
Russia recently announced its withdrawal from the deal, prompting fears that it could create a serious food crisis for many African countries already facing famine.
When there is a food security crisis in the whole world, this ban imposed by India can deepen the world crisis.
Krishna B Kumar, a software engineer based in Dallas, US, says, “A bag of about 10 kg of rice, which used to be available for $14 to $15, is now available for $40. A bag of flour, previously available for $12, is now available for $20. Everything has gone up in price. People are hoarding grains fearing that they will run out of stock.
How much rice does India export?
Why is the ban on rice exports so important to global trade? To understand this, let's take a look at the data.
According to the Reuters news agency, India's share in global rice exports is more than 40%.
In 2022, it was 55.4 million tonnes, which is more than the combined exports of the world's four largest rice-exporting countries, Thailand, Vietnam, Pakistan, and the United States.
India exports rice to more than 140 countries. African countries Angola, Cameroon, Djibouti, Ivory Coast, Kenya, and Nepal are among the major buyers of India's non-basmati rice.
India exported 17.86 million tonnes of non-basmati rice in 2022, including 10.3 million tonnes of white rice.
In September 2022, India banned the export of broken rice and imposed a 20 percent duty on the export of various types of rice.
Farmers in India plant crops twice a year. The June-sown crop accounted for more than 80% of the total production of 135.5 million tonnes in 2022-23.