India has a possible crackdown on broken rice exports. It shows the world’s top carrier trying to thread the needle to cool domestic inflation without causing a global panic.
The government is discussing restrictions on broken rice exports. The exports account for under 20% of the country’s overseas shipments. 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 restricted all rice exports.
India accounts for 40% of the world’s rice trade. Any change in its export policy has huge implications for the billions of people who depend on staple food. During the 2007-08 food crisis, India blocked rice exports, prompting other producers such as Vietnam to follow suit. That sparked panic buying, sending rice prices to more than $1,000 per ton, more than double the current level.
Potential restrictions on broken rice are unlikely to lead to a crisis like that of 2007-08, said Peter Timmer. Peter Timmer is a professor emeritus at Harvard University. He worked with Asian governments on their policy responses during that crisis.
“This is a very responsible way for India to act, and I doubt there will be a lot of foreign criticism,” he said.
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India has responded to rising global commodity prices this year by limiting exports of sugar and wheat. After Russia invaded Ukraine, Prime Minister Narendra Modi declared his country ready to “feed the world”. Changed course weeks later by restricting wheat exports to protect its food supplies. This drew criticism from agriculture ministers from a group of seven nations. They said such measures worsen the global food crisis.
With potential trade restrictions on broken rice, the affected rice exports will be only about a fifth of India’s rice. This type of rice is fragmented during processing. The main buyers are China, which uses the grain for animal feed, and some poor African countries that import the grain for feed, as it tends to be cheaper.
Any restriction on broken rice will hurt some countries but will not cause a full-blown crisis in the global market, according to Satish Deodhar a professor at the Indian Institute of Management in Ahmedabad. India will want to maintain a balance between its domestic needs and the export market, he said.
