India’s ban on rice exports has halted trade in Asia as buyers look for substitute supplies in countries like Vietnam, Thailand, and Myanmar where vendors are delaying transactions due to rising pricing, according to business officials.
In an effort to increase supplies and stabilise prices after sowing was hampered by below-average monsoon rainfall, India, the world’s largest exporter of the grain, prohibited shipments of broken rice on Thursday and placed a 20% levy on exports of other types.
This year, governments have struggled to increase supplies and combat inflation while dealing with trade disruptions brought on by the conflict in Ukraine. Rice is the latest in a long list of commodities to face export restrictions. Since India’s announcement, the price of rice has increased by 5% in Asia, and this week it is predicted to rise, even more, deterring both buyers and sellers.
The world’s next four top rice exporters, Thailand, Vietnam, Pakistan, and the United States, combined to ship fewer tonnes of rice than India, which in 2021 exported a record 21.5 million tonnes.
Due to purchasers’ refusal to pay the government’s additional 20% export fee on top of the negotiated contract price, the loading of rice has halted at Indian ports, trapping roughly one million tonnes of grain there.
According to Nitin Gupta, vice-president for Olam India’s rice division, shippers are now organising pending contracts even though some buyers are willing to pay higher amounts for new contracts.
Buyers are attempting to get supply from rivals Thailand, Vietnam, and Myanmar, which has hiked the price of 5% broken white rice by about $20 per tonne in the previous four days, traders claimed, while Indian exporters halted signing new contracts.
The price of Vietnam’s 5% broken rice was $410 per tonne on Monday, up from $390 to $393 per tonne the previous week, according to merchants.
Leading importers of common grade rice include China, the Philippines, Bangladesh, and African nations including Senegal, Benin, Nigeria, and Ghana, while Iran, Iraq, and Saudi Arabia purchase premium grade basmati rice.
The COVID-19 pandemic and more recent Russia-Ukraine war supply interruptions have driven up grain prices, but rice has mostly defied the trend thanks to big crops and substantial stocks at exporters over the previous two years.
According to a Mumbai-based dealer with a multinational trading company, buyers now worry that India’s decision could increase rice prices and make the staple as expensive as wheat and corn.