NEW DELHI (BLOOMBERG) – India’s potential clampdown on exports of broken rice shows the world’s top shipper trying to thread the needle of cooling domestic inflation without causing global panic.
The government is discussing curbs on broken rice exports, which account for a little under 20 per cent of the country’s shipments abroad.
While such a move has the potential to further disrupt global crop markets and worsen a hunger crisis, the impact is less severe than if it were to restrict all rice exports.
India accounts for 40 per cent of the global rice trade, so any change in its export policy has huge implications for the billions of people who depend on the staple.
During the 2007-2008 food crisis, India blocked rice exports, leading other producers such as Vietnam to follow suit. That sparked panic buying, sending rice prices to more than US$1,000 (S$1,400) a tonne, more than double the level now.
The potential restrictions on broken rice are unlikely to lead to a similar crisis, said Professor Emeritus Peter Timmer, of Harvard University, who worked with Asian governments on their policy responses during that crisis.
“I actually think this is a very responsible way for India to act, and I doubt there will be much foreign criticism,” he said.
India has responded to rising global commodity prices this year by limiting exports of sugar and wheat.
After Russia’s invasion of Ukraine, Prime Minister Narendra Modi declared that his country was ready to “feed the world”, but changed course weeks later by restricting wheat exports to protect its own food supplies.
This drew criticism from farm ministers of the Group of Seven nations, who said that such measures make the world’s food crisis worse.
With the potential trade curbs on broken rice, only about a fifth of India’s rice exports will be affected. This type of rice is fragmented during processing. The top buyers are China, which uses the grain for animal feed, and some poor African countries that import the grain for food as it tends to be cheaper.
Any restrictions on broken rice will hurt a few countries, but it will not cause a full-blown crisis on the global market, according to Professor Satish Deodhar, of the Indian Institute of Management Ahmedabad.
India will want to maintain a balance between its domestic requirement and export market, he said.