India’s rice export curbs are the last thing campaigners for food security needed.
It had already looked quite a trial keeping the global population fed at a time of elevated food prices and declining real-term wages.
The United Nations reported in July growth of 150m people, to 828m, since the outbreak of the Covid pandemic in the number of people affected by hunger.
That challenge just got more testing.
Sure, it could have been worse.
At least India, fretting about the uneven distribution of rains across rice-growing regions, has only banned exports of broken rice. Shipments of other types of rice will be allowed, but with a 20% duty, with basmati and par-boiled types escaping even that.
Still, the curbs look significant nonetheless.
India is, by far, the world’s biggest source of rice exports. The US Department of Agriculture had forecast its 2022-23 shipments at 22.0m tonnes – 40% of the world total.
(Thailand, the second biggest exporter, and third-ranked Vietnam were expected to ship 13.9m tonnes between them.)
By squeezing its imports, India stands to buoy prices worldwide.
Matters could get a lot more serious yet.
Price gains could go into overdrive if India sets a trend on market interference – something in which the rice market has form.
In 2007, a ban by Vietnam on commercial sales by Vietnam, and a minimum export price imposed by India, sparked a round of export restrictions among other origins, such as Cambodia, Thailand and China.
The result was a tripling in rice prices, as measured by benchmark Thai values, between November 2007 and May 2008, taking them to record highs.
Big stocks, but…
So it is only a modest reassurance that world rice stocks are high by historical standards, forecast by the USDA to end 2022-23 at their fourth-largest ever.
Nor is it indeed a total comfort that according to the UN last week, stocks held by major exporters – after all, including India – were expected to close the season “at their second highest level on record, at 54.0m tonnes, thanks to sizeable anticipated 2022 harvests and ample opening inventories”.
Supplies were strong in 2007 and 2008 too. The world witnessed four successive record rice harvests from 2005-06 to 2008-09.
It is imperative, for the 3.5bn people who rely on rice as a staple food, that the market avoids repeating history, in allowing a setback to escalate into a crisis.
The international community, including the UN, must act now to persuade India to limit the duration of its curbs, and avoid the spread of protectionism to other exporting nations.