India has put new restrictions on wheat and sugar exports, and it is rumored that rice might be the next staple that is cut off, because of this, economists are in a panic about what this might mean very soon for the global economy.
Radhika Piplani is an economist from Yes Bank Ltd. said, “The government has already imposed restrictions on wheat exports; it’s a matter of time when restrictions on rice exports might be considered.”
Around 40 percent of the world’s supply of rice comes from India and if exports are restricted, it would have a “devastating impact” on global trade, according to the USDA Foreign Agriculture Service. Price increases are inevitable, and starvation would become commonplace around the world.
Poornima Varma, assistant professor at the Centre for Management in Agriculture at the Indian Institute of Management, Ahmedabad said, “Restricting exports of rice is a possibility,” adding, “The government may feel there’s a need to substitute wheat with rice to curb domestic inflation and safeguard food security.”
Although India has a vast reserve of rice, there is worry that the heavily populated nation will stop exports to ensure there is enough for its citizens. Rice and wheat are considered primary staples and the government has a food aid program to keep these key essential items available to everyone.
Senior economist at Kotak Institutional Equities, Suvodeep Rakshit, expects rice restrictions in the next few months.
“Rice is about to be sown and output depends on the weather. If the monsoon is erratic and rice prices jump, it’s likely that exports will be curbed,” he said.
Since the Russia and Ukraine war, disruptions in the supply chain have worsened and other countries may begin to follow suit because of the food supply being so unstable.
In early 2022, corn was also rising in price and is now up by 20 percent, while the price of wheat has soared to around 80 percent, while rice has stayed the same. But that might be ending soon as rice will be used to supplement the lack of wheat, which is only around 50 percent stocked for India.
Shirley Mustafa, an economist at the United Nations Food and Agriculture Organization says the rice reserves in India are adequate to meet the country’s needs “even with the enlargement of rice rations due to the prevailing wheat situation.”
The president of the Rice Exporters Association, B.V. Kirshna Rao said there is no need to ban rice exports, but “if the government still wants to impose a quantitative restriction it can be a political call and the trade will welcome that in the national interest.”
This could set off a chain throughout the world, where countries hold tight to their crops and ban exports.
Argentina has already banned the export of soybeans, which is heavily bought by the Chinese market, so the Chinese will also be looking to other countries to fill the gap.
