India, the world’s biggest rice shipper, is considering banning exports of most rice varieties, a move that may send already lofty global prices of the food staple higher as the disruptive El Niño weather pattern returns.
The government is discussing a plan to ban exports of all non-Basmati rice, according to people familiar with the matter. Authorities want to avoid the risk of more inflation before elections, said the people, who asked not to be identified as the information is not public.
The ban will affect about 80% of India’s rice exports. While the move may lower domestic prices, it risks sending global costs even higher. Rice is a staple for about half of the world’s population, with Asia consuming about 90% of global supply. Benchmark prices have already soared to a two-year high amid fears that the return of the El Niño weather phenomenon will damage crops.
India accounts for about 40% of the global rice trade and has sought to tighten trade of some varieties. Last year, the South Asian nation banned broken rice exports and imposed a 20% duty on shipments of white and brown rice after Russia’s invasion of Ukraine sent prices of food staples like wheat and corn soaring. The country has also restricted wheat and sugar exports.
Representatives for the food, trade and finance ministries didn’t respond to emails or text messages seeking comment.
Importers such as Indonesia, China and the Philippines have been aggressively stockpiling rice this year. El Niño conditions have developed in the tropical Pacific for the first time in seven years, according to the World Meteorological Organization, threatening to bring drought to many rice-growing regions. A potential ban by India will add to worries over supply.
India’s plan comes after its consumer price inflation quickened in June, mainly due to higher food prices. Bloomberg Economics expects inflation to rebound further with the latest surge in tomato prices — a key ingredient in Indian cuisine — and an increase in the government’s support price for monsoon-sown crops.
--With assistance from Pratik Parija.