Express View on curbs on rice exports: Against the grain

Source– The post is based on the article “Express View on curbs on rice exports: Against the grain” published in “The Indian Express” on 22nd July 2023.

Syllabus: GS2- Economy

Relevance: Government policies and approach towards trade.

News- The Narendra Modi government has decided to ban all non-basmati white rice shipments. Henceforth, only two categories of rice will be allowed for export.

What can be the implication of this move by the government?

The world’s total rice exports was 55.6 mt in 2023-23. India’s share was more than 40%.

India has an important role in the global rice trade. It is similar to that of Indonesia and Malaysia in palm oil.

Rice suppliers likeThailand, Vietnam, Pakistan, US and Myanmar cannot fill the vacuum left by India. It will lead to an increase in world prices.

What can be the possible reasons for the government ‘s move to ban rice exports?

There are concerns related to domestic supply. Current rice crops may be impacted due to the below-average monsoon rainfall in significant rice-growing states.

Although certain states such as Telangana, Andhra Pradesh, Odisha, and Chhattisgarh have received adequate rainfall in the past week, the impact of delayed plantings on yields is yet to be observed.

Another factor contributing to uncertainty is the El Niño phenomenon. It can affect the monsoon’s performance in the second half of the season. This could have repercussions on the growth of kharif rice and the upcoming rabi wheat crop.

What are two crucial aspects related to this move that should be considered by the government?

Firstly, there is the issue of credibility. If India’s Agriculture Ministry has reported record-high production of wheat and rice in 2022-23, then there is no need to ban the exports of these cereals. This raises doubts about the reliability of the official output estimates.

Secondly, the government should be mindful of its reputation as a dependable global supplier.

Establishing markets requires significant time and effort. It can easily be undermined by hasty decisions.

If the goal is to curb domestic inflation by discouraging exports, a more appropriate approach would be to impose tariffs or set a minimum price below which shipments are not allowed. Implementing blanket export bans can cause more harm than good.