Prices slide as India unwinds ban on rice exports

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India has lifted its final restrictions on rice exports in a bid to double agricultural shipments by the tip of the last decade and enhance financial development.

India is the world’s largest rice exporter and this month’s choice to open up all rice for export has piled strain on rival producers. The value of a metric tonne of benchmark Thai white rice had fallen to $405 by final week, down from $669 in January 2024.

The choice comes as New Delhi seeks to extend agricultural and meals exports to boost earnings and farmers’ revenue amid an economic slowdown in a rustic the place the agriculture sector helps greater than 42 per cent of the 1.4bn inhabitants.

India’s aim, based on commerce minister Piyush Goyal, was to ship $100bn price of agricultural and meals items by 2030 — greater than double the $48.15bn shipped in 2023-24.

“Final 12 months we did about $50bn {dollars} in exports from India. However then, identical to the abdomen is hungry for extra, the commerce ministry of any nation is hungry for better achievement. I do hope to see a three-digit mark, the $100bn mark,” he mentioned earlier this 12 months. The federal government has additionally eased restrictions on sugar exports.

India started cracking down on rice exports in 2022 amid fears of a shortfall as costs rose within the aftermath of Russia’s full-scale invasion of Ukraine. These restrictions triggered panic-buying in Asia and North America and despatched the Asian benchmark rice worth to its highest degree since 2008.

India started easing export restrictions in September. New Delhi, which exported 14mn tonnes of rice in 2023, is anticipated to export a document 21.5mn metric tonnes of rice between September 2024 and October 2025, based on S&P World.

“In a market of about 54-55mn tonnes international, if India exports greater than 20mn tonnes, it might be flooding the market,” mentioned Ashok Gulati, an agricultural economist on the Indian Council for Analysis on Worldwide Financial Relations.

India’s return to the market has come on the expense of cash-strapped Pakistan, which had enjoyed a shortlived bump as its exporters captured a part of India’s market share in locations akin to Indonesia and east Africa. 

Ibrahim Shafiq, director for exports at Lahore-based Latif Rice Mills, mentioned that costs for non-basmati rice from Pakistan fell to $650 per metric tonne from $850 “nearly in a single day” when India lifted its ban in September.

“As quickly as India was again out there, African and Indonesian markets reverted again to cheaply priced Indian rice,” he mentioned, inflicting revenues to take “a success in comparison with earlier years”.

The US Division of Agriculture estimates that Pakistan will export simply 5.8mn tonnes of rice within the 12 months to Might — an 11.4 per cent drop on the earlier cycle. 

“Pakistan, Vietnam and Thailand, all of them captured a few of the markets when India left that vacuum there. As soon as India’s returned to the market, no one actually can compete with India,” mentioned Samarendu Mohanty, a Bengaluru-based rice economist. “India will get this market again. This can drive everyone else out of the African market,” he added.

The surge in India exports will allow poor African nations to safe the grain at decrease costs, in addition to assist east Asian animal feed and ethanol producers, analysts mentioned.

Africa is often a big marketplace for damaged rice — accounting for greater than 80 per cent of India’s exports over 2018-20, based on data from the Worldwide Meals Coverage Analysis Institute. In 2022, Indian rice accounted for greater than 60 per cent of rice imports for 17 African nations and greater than 80 per cent in 9, together with Somalia.

“The lifting of the restrictions is greater than welcome as a result of we often import big quantities of rice from India,” mentioned Ahmed Elmi Mohamed, a senior agricultural official in Mogadishu.

Information visualisation by Haohsiang Ko