India’s export restrictions on rice continue to disrupt global markets, supplies, and prices
Six months after India introduced a set of export restrictions on rice with the aim of holding down domestic prices, global rice markets continue to feel the impact.
The benchmark Thai white rice price (5% broken) has risen 22% since India’s export ban on non-basmati white rice took effect in July 2023 (Figure 1). Global supplies have been disrupted, as exports of each of India’s restricted products—non-basmati white rice, parboiled rice and broken rice—are down sharply in the same time frame. This has put importing countries in South and Southeast Asia and sub-Saharan Africa in a bind, forcing them to seek alternative sources even as other major rice-exporting countries including Viet Nam and Thailand face production losses due to the effects of El Niño.
This post provides an update to previous posts in May, July, and October 2023 on the impact of weather and India's export restrictions on global rice markets—in particular, markets in sub-Saharan Africa.
Global rice production and El Niño
Production has been relatively flat worldwide, partly due to the drying effects of El Niño on key Asian producers. The U.S. Department of Agriculture estimates that global rice production for the 2023/2024 marketing year will exceed the previous year’s level by about 583,000 metric tons (MT)—an increase of only about 0.1%.
Despite this marginal increase, rice exports are down 3.8 million MT, 5% from last year’s levels. Increased exports from Pakistan, the United States, and Myanmar total about 2 million MT, while the total decline from major exporters like India, Viet Nam, and Thailand is about 5.5 million MT. India’s rice exports fell 4.2 million MT in 2023/24, a decline of 21% (Figure 2).
Among the top six exporters, Pakistan’s production levels are up an estimated 3.5 million MT (up 64% over last year’s flood-affected crop) while U.S. rice production is up 1.9 million MT (up 32% due to higher plantings and yield this year compared to last) and Myanmar’s production is up 150,000 (an increase of 1.3%). But these gains are partially offset by El Niño-related production losses in India (down 3.8 million MT or -2.8%) and Thailand (down 900,000 MT or -4.3%).
On a positive note for global production going forward, the effects of El Niño on crop conditions for rice-producing countries in South and Southeast Asia looked generally favorable as of late January, with the exception of some dryness in southern India. El Niño-Southern Oscillation (ENSO) diagnostic models suggest that that the current El Niño could still affect the February-April season in Southeast Asia, but it is expected to weaken significantly over the next few months as Pacific ocean temperatures transition to a ENSO-neutral state by April-June.
Indian rice exports down
Amid these already-uncertain global supplies, India’s export restrictions have added additional market stresses. India began its current round of escalating rice export restrictions in August 2022, banning exports of broken rice and imposing additional duties on the export of non-basmati white rice (excluding parboiled rice). Then came the July 2023 ban on non-basmati rice, followed in August by further restrictions on basmati rice and parboiled rice. Rice exports fell sharply as a result (Figure 3).
Exports of broken rice plunged in the last quarter of 2022, particularly to China (which was importing broken rice as an animal feed). While exports continued throughout the first half of 2023 to important West African markets such as Senegal, since July 2023 they have been negligible. Between August-November 2023, India exported just 28,500 MT of broken rice, a decline of 95% from the previous year. The ban on non-basmati white rice has also resulted in a similar drop in export volumes. Between August-November 2023, non-basmati white rice exports totaled about 154,000 MT, a 93% decline.
Parboiled rice exports, unaffected by the July measures, jumped 39% in August as exporters switched products to make up for their losses. India’s 20% supplemental duty on parboiled exports came that same month in response. In September, parboiled rice exports dropped by 69%.
For August-November 2023, Indian rice exports totaled 3.7 million MT, a decline of 46% from the previous year. Only basmati rice exports increased, up 12% during August-November 2023 compared to 2022.
Thus, India rice exports have declined across most of its major markets (Figure 4). Those showing an increase (North America, Northern Europe, Southern Africa) are regions where basmati rice dominates.
But most regions where the dominant types of India rice imports were subject to export restrictions saw declines of 50% or more over the previous year—particularly sub-Saharan Africa. For example, India’s exports to West Africa declined about 1.2 million MT or 54%, while India rice exports to countries in East and Middle Africa declined by 58% and 80%, respectively.
Are importing countries finding alternative sources for rice?
As we noted in our previous post, India is a key global source of rice, particularly for countries in Africa (Figure 5). How have African countries contended with the loss of imports from India?
Unfortunately, a comprehensive analysis is difficult because of the relative paucity of monthly import data from many countries, particularly in sub-Saharan Africa. Instead, here we concentrate on three significant African importers of India rice for which import data are available—Madagascar, Kenya, and Senegal—to better understand the impacts of India's trade actions.
Madagascar imports of rice from all sources averaged 425,000 MT in 2023, down 44% from 2022 levels and down 32% from the 3-year average of 2020-2022 (Figure 6). Roughly 80% of its imported rice is sourced from India in the form of non-basmati, non-parboiled rice. Since August, most of its rice imports have come from Pakistan.
Over the first seven months of 2023, Kenya imported 817,000 MT of rice, almost 70% of which was sourced from India (Figure 7). After the restrictions took effect, rice imports slowed to almost zero. Pakistan has been an important supplier in the past, but imports have not risen (through November) to offset the decline.
Senegal is a large importer of broken rice, which is used in traditional cuisine such as the fish and rice dish thiéboudienne. In recent years, India has been a major supplier of broken rice to Senegal, accounting for as much as 64% of total imports in 2022 and over 80% of imports for January-August 2023. Since September, imports of broken rice from India have declined by more than 50%. Senegal has been able to make up some of the decline through increased imports of broken rice from Thailand and Brazil (Figure 8).
Global rice markets have been in a state of flux, as impacts of El Niño reduced production in South and Southeast Asia and India reduced exports by half. Rice-importing countries in sub-Saharan Africa have felt the greatest impacts, scrambling to find alternative sources, even as global rice prices have risen more than 20% since India imposed its restrictions. But forecasts projecting that the current El Niño will wane over the next few months offer some hope for improved future production prospects.
The key question is, how long will India's export restrictions remain in place? Recent reports suggest that India is considering extending the 20% duty on parboiled rice beyond the March 31 expiration date. Some have speculated that nothing will change until India’s general elections conclude in late spring. Given this uncertainty, if India exports continue at their current pace (50% of normal) beyond the elections, it seems likely that global export forecasts will have to be adjusted downward, likely resulting in higher prices and more pressure on food security in rice importing countries.