Global Rice News

India’s Rice Output Expected to Drop, Export Ban Likely to Continue

SITAPUR, India – India, the world’s largest rice exporter, is expected to experience a decline in rice production this year for the first time in eight years. This has led to concerns that the Indian government will extend export restrictions on rice in order to control food prices ahead of upcoming elections. The ban on non-basmati white rice exports, imposed by New Delhi in July, has already caused global rice prices to rise.

The condition of this year’s rice crop is uncertain due to an uneven monsoon. Despite an increase in the area under paddy, experts forecast that rice output could drop by as much as 8% compared to the record production of the previous year.

High domestic rice prices and the upcoming state elections this month, as well as next year’s general election, have raised concerns among farmers and traders that the government will extend the export restrictions. With India being responsible for 40% of global rice trade, the crop loss affects not only India but also other Asian and African buyers who struggle to secure rice supplies in the face of rising global prices and low inventories in key exporting countries such as Thailand, Vietnam, Pakistan, and Myanmar.

Experts predict that even a slight drop in rice production would justify the Indian government’s decision to keep export restrictions in place due to their sensitivity to food prices, especially during election seasons. The U.S. Department of Agriculture anticipates a 3% decrease in India’s rice output, while the Rice Exporters Association expects a smaller decline of 2% to 3%. The Ministry of Agriculture & Farmers Welfare estimates a 4% drop in rice production from the summer-sown crop and will provide a more comprehensive estimate in its second report to be published in February.

The upcoming winter crop is expected to contribute significantly to the decline in rice output. Despite recent increases in production from winter-sown paddy, this year’s output is projected to decline by up to 20% due to lower water levels in reservoirs. India’s main reservoirs are currently at 71% of capacity, compared to 89% a year ago, as a result of unevenly distributed summer monsoon rains.

The Indian government has implemented export restrictions on various commodities, including rice, wheat, sugar, and onions, in an effort to manage food prices. However, local rice prices remain nearly 15% higher than last year. To ensure an adequate supply of rice for subsidized distribution, the government is considering extending its program that provides free or subsidized cereals to over 800 million people. Export considerations will only be addressed after the general elections.

Thailand and Vietnam have responded to India’s export restrictions by increasing their own rice exports, but limited surpluses make it challenging to bridge the supply gap. This may result in even higher prices if India continues to ban rice exports.

Farmers like Ramkali Bhargav, who experienced losses from paddy cultivation due to unpredictable weather, can only hope for better returns from the upcoming wheat crop.

Source: Source