An avoidable ban – Restrictions on rice exports can be counterproductive

Source: The post is based on an article “An avoidable ban – Restrictions on rice exports can be counterproductive” published in Business Standard on 28^th July 2023.

Syllabus: GS 2 – Government Policies & Intervention

Relevance: concerns with ban on rice exports

News: Recently, India has decided to ban the export of all types of rice, except Basmati and parboiled rice.

What are the implications of this ban?

The government has taken measures to check the domestic rice prices in India and ensure food security. However, the ban has increased the price of rice internationally. 

India is the world’s leading rice exporter, accounting for nearly 40 per cent of global trade. Hence, when India suddenly stopped exporting rice, it caused a decrease in the global rice supply by about 10 million tonnes.

The other major exporters of non-scented rice are Thailand and Vietnam. However, they do not have an adequate amount to fill this gap.

Food-deficit countries, particularly small African nations, heavily dependent on rice shipments from India, will also be significantly affected by the ban.

Further, uncertainties in harvests caused by weather conditions in multiple countries, and Russia’s decision to withdraw permission for Ukraine to export grains from Black Sea ports have also raised the prices of rice globally.

Must Read: India’s rice export ban impacts Asian and African nations most and Express View on curbs on rice exports: Against the grain

What are the challenges associated with the ban?

The government’s decision to enforce a ban is being criticized because – a) India may miss out on the opportunity to benefit from the current high level of global prices, b) it may discourage farmers from increasing paddy cultivation and investing in yield-boosting farm inputs and c) it could damage India’s reputation as a reliable supplier of food grains and a trustworthy trade partner.

What makes the ban illegitimate?

Substantial stock: Although there has been a rise in the prices of rice by around 11.5% in a year, there is no actual shortage of rice in local markets.

The Food Corporation of India still holds a substantial stock of rice (41 million tones) which is more than three times the buffer stocking norm of 13.54 million.

This is more than enough to meet the government’s requirements for the public distribution system, which ranges from 36 to 38 million tones.

Diminishing Impact of El Nino: The concerns about the potential impact of El Nino on monsoon rainfall and paddy sowing in the current kharif season have diminished significantly.

The monsoon rain has been above normal, and paddy sowing is progressing well. 

Hence, it is recommended that the government should avoid impulsive reactions to market fluctuations and prioritize the establishment of essential stability in both domestic and international grain trade policies.