International Business News – India’s grain export ban may be tightened again. Reuters reported on October 10 that heavy rains damaged key crops such as rice sown in India during the summer, which may exacerbate inflation in India, with rising food prices in turn prompting New Delhi to impose more restrictions on exports of rice, wheat and other grains. The Indian government issued a ban in September on exports of broken rice used in livestock farming and imposed a 20 percent tariff on exports of rice other than Indian aromatic rice. Combined with India’s wheat export ban earlier in the year and rising global geopolitical risks, India’s rice ban, the world’s largest rice exporter, may trigger further increases in global food prices and stimulate nerves over global food security. What variables will India’s latest rice ban bring to global food prices? Will China be affected? The Global Times reporter conducted an interview to investigate this.
After 4178% increase in exports
India’s “The Mint” reported that the Indian government recently said that India’s rice production this year may be reduced by 10 million to 12 million tons, for domestic food security considerations, the Indian government tightened grain exports. India’s official data show that this year, India’s domestic crushed rice prices once soared 38%, exports also went all the way up. India’s Business Standard website said that from April to August this year, compared to the same period in 2019, India’s crushed rice exports grew 4178%.
The Mint newspaper said that in addition to heavy rainfall, some of India’s growing areas also suffered from high temperatures and dry weather in the summer, monsoon rainfall is about 40% lower than average, resulting in an 8% reduction in the area planted with rice. 2021-2022 fiscal year India’s total rice production is estimated at 130 million tons, of which 111 million tons produced from June to September rainy season. Combined with the high temperature led to more than 15% reduction in India’s wheat production, India had to implement a rice export ban, with rice to replace the reduced wheat production. It is reported that India this restriction on exports of rice is mainly broken rice. Although broken rice unlike soybeans and other can be used as the main feed, but can also be used as a feed substitute, India to ensure that the country’s higher economic value of livestock feed supply.
Wang Yongzhong, director of the International Commodity Research Unit of the Institute of World Economics and Politics/National Global Strategy Think Tank at the Chinese Academy of Social Sciences, told the Global Times that three factors – fertilizer prices, weather and geopolitics – led to India’s rice ban. Compared to wheat, corn and soybean prices, which often fluctuate, Indian rice prices have been relatively stable. However, since this year, global fertilizer prices are at an all-time high, raising the cost of rice cultivation. Especially since the Russia-Ukraine conflict, the two major exporters of potash, Russia and Belarus, have had their exports blocked, leading to a continuous rise in fertilizer prices.
The Nikkei Chinese website reported under the title “India, the largest rice exporter, starts ‘hoarding food'” that the international price of rice is rising under the supply chain disruption caused by the epidemic and the situation in Russia and Ukraine, but India pays more attention to domestic supply. India has previously restricted exports of wheat and sugar, and global food prices may face new upward pressure.
Vietnam and Thailand will benefit?
The U.S. website CNBC reported that Indian rice exports account for about 40% of global rice trade, exporting to more than 150 countries and regions. India’s rice ban has sparked global concern and tension over further increases in global food prices.
Japan’s Nomura Securities latest report and the U.S. CNBC website report both believe that India’s rice export ban on Asian countries of varying degrees of impact, including Indonesia, the Philippines by the biggest impact. The latest Nomura Securities report said that the Philippines imports of rice accounted for 20% of its total consumption, is the country most affected by the rice ban.
However, some countries will benefit from India’s rice export ban, mainly Thailand and Vietnam. These two countries are the world’s second and third largest rice exporters and will fill the market gap left by India. 2021, Vietnam’s rice production of 44 million tons, exports brought 3.133 billion U.S. dollars in revenue. Thailand’s rice production in 2021 is 21.4 million tons. As Indian exporters stop signing new contracts, buyers are trying to get rice supplies from India’s rivals Thailand, Vietnam and Myanmar, a trader said, Reuters reported.
India has been the cheapest supplier of rice, which has somewhat protected African countries such as Nigeria, Benin and Cameroon from rising wheat and corn prices, said a Mumbai-based dealer for a global trading company. According to Wang Yongzhong, the export ban and the imposition of export taxes have increased the cost of Indian rice exports, which will drive up the price of rice on the international market and increase the burden on low-income countries.
How much impact on China
The Business Standard website recently reported that India will export 3.8-3.9 million tons of broken rice in fiscal year 2021-2022, of which 1.6 million tons will be exported to China. Nevertheless, Wang Yongzhong believes that the impact of India’s rice ban on China is minimal, “China’s grain reserves are sufficient, and broken rice is a strong alternative, so the impact on China is minimal.
For the ban on the export of Indian rice, Jiang Sanqiao, deputy general manager of Anhui Tsuen Yin Hi-Tech Seed Industry Co., Ltd. (hereinafter referred to as “Tsuen Yin Hi-Tech”), said in an interview with the Global Times reporter that the ban has little impact on China. China has achieved basic self-sufficiency in grain and absolute security of rations. The reason for importing Indian broken rice, Jiang Sanqiao explained, China has quota restrictions on rice imports, but there is no quota limit for broken rice. Crushed rice can be added to the feed to supplement the shortage of domestic corn supply, and can also be made into bridge rice noodles, snail flour, rice noodles and other products to meet the needs of the domestic market.
Right now, China is also in the middle of the autumn harvest. The latest agricultural dispatch from China’s Ministry of Agriculture and Rural Affairs shows that the nation’s autumn harvest is more than halfway along and the harvest is entering its peak. Jiang Sanqiao told reporters that, from Anhui Province, the summer cereal production, mainly wheat, increased, and the overall yield of autumn cereals could be on par with last year, although affected by the drought and high temperature this summer. He concluded that the main reason for a good harvest of autumn grains, one is that the government at all levels this year has done a lot of work, the organization and coordination of water conservation, water transfer and other drought work to ensure that the grain harvest; second is that some of China’s head seed companies have been engaged in heat and drought resistant and other seed research and development work for many years, this year these high-quality seeds play a big role in ensuring that the yield of rice this year.