India, the second largest exporter of rice in the world, has banned shipments of broken rice and imposed a 20% duty on exports of various other grades late last week as the country tries to boost supplies and calm prices after below-average monsoon rainfall curtailed planting. As a result of this, India's rice exports could fall by around a quarter this year and may force buyers to switch to rival suppliers who are offering grain at a cheaper price, trade and industry officials told Reuters.
"The duty has made Indian rice expensive. Exports would drop by at least 5 million tonnes, "B.V. Krishna Rao, president of The Rice Exporters Association (TREA)," told Reuters.
That would leave exports this year at around 16.2 million tonnes. Rice shipments reached a record 21.2 million tonnes in the 2021/22 fiscal year, more than the combined shipments of the world's next four biggest exporters of grain: Thailand, Vietnam, Pakistan, and the United States.
Meanwhile, Thailand, Vietnam, and other suppliers have raised the prices of white rice after India imposed curbs last week, the report said.
Rao said that New Delhi has imposed the duty only on white rice, which could prompt some buyers to switch to parboiled rice, which is exempted from export duties.
Rice exports jumped to 9.36 million tonnes in the first five months of the current fiscal year that began on April 1, up from 8.36 million tonnes in the same period a year ago, according to government data.
Following the implementation of wheat exports, industry experts predicted that India would also prohibit rice exports due to a lack of rainfall in major rice-producing states.
Globally, ten countries account for nearly 85% of global rice production, with China and India leading the way. China has already witnessed a decline in rice yield due to pest issues, whereas other rice-producing countries like Thailand and Vietnam have reported a decline in crop yields too, along with the increased cost of production.
In August, rice prices shot up due to the rise in demand from Bangladesh, Iran, Iraq, and Saudi Arabia. Bangladesh has reduced its import duty and tariff to 25%, from the previous 62.5%, in June 2022. The revised import policy had encouraged more Indian traders to export rice out of India to clock in more income, which led to a 10% jump in rice prices in the first five days of the announcement, said Yes Bank in a report.
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