How reliant is the world on Indian rice exports?
Rice, a staple food consumed by billions worldwide, is currently under the spotlight due to surging global prices and India's abrupt decision to halt non-basmati white rice exports. This move has raised questions about the world's reliance on Indian rice exports and the potential impact on global food security.
Global Rice Prices at 15-Year High
The United Nations Food and Agriculture Organization (FAO) recently reported that global rice prices have reached their highest levels in 15 years. This unprecedented surge follows India's announcement on July 20 that it would cease the export of non-basmati white rice immediately. The decision sent shockwaves through the international rice market, further compounded by Russia's decision to suspend participation in the Black Sea Grain Initiative.
Potential Knock-on Effects
Traders have expressed concerns that the shortage of rice could have a cascading effect on other staple crops such as wheat, soybeans, corn, and maize, as these are often used as substitutes for rice. The world's growing dependence on rice makes this situation particularly concerning.
Rice: A Water-Intensive Crop
Cultivated for thousands of years, rice is the third most-produced grain globally, taking anywhere from 90 to 200 days to grow, depending on the variety and environmental conditions. However, it is also one of the most water-intensive crops, requiring approximately 3,000 to 5,000 liters of water per kilogram, making it three times more water-intensive than wheat.
India's export ban was primarily implemented to control domestic prices and to preemptively address the potential threat of the El Niño weather pattern, which can lead to droughts and reduced yields.
India: The World's Largest Rice Exporter
India has risen to become the world's largest exporter of rice, accounting for nearly 40% of total rice exports. Projections suggest that India will export a staggering 54 million tonnes over the 2022-2023 crop year. In comparison, Thailand, the second-largest exporter, is expected to export 8.5 million tonnes. Following Thailand are Vietnam (7.9 million tonnes), Pakistan (3.6 million tonnes), and the United States (2.1 million tonnes).
Who Buys India's Rice?
From January to July, India exported approximately 12.9 million tonnes of rice valued at nearly $7 billion to over 150 countries. A significant portion of India's exports (77%) consists of non-basmati parboiled rice, while the remaining 23% is basmati rice.
The largest purchasers of Indian non-basmati rice this year are Benin (1.17 million tonnes), Senegal (872,080 tonnes), and Kenya (685,302 tonnes). The majority of these top buyers are African nations, which predominantly import broken rice, known for being the cheapest and most filling variety.
As for basmati rice, Saudi Arabia (639,150 tonnes), Iran (545,751 tonnes), and Iraq (383,687 tonnes) top the list of India's largest buyers.
Impact on Global Rice Trade
The U.S. Department of Agriculture (USDA) has revised its global rice trade forecasts for 2023 and 2024, reflecting the repercussions of India's export ban. The organization now projects milled rice trade in 2024 to be 52.9 million tonnes, down by 3.44 million tonnes from previous forecasts.
The ban's ripple effect on rice prices is unlikely to subside in the short term. The FAO suggests that any potential recovery in rice trade next year would require the lifting of India's export restrictions.
The world's reliance on Indian rice exports has become increasingly apparent as prices surge, emphasizing the need for global cooperation to ensure food security in these challenging times.