India, the world’s second largest producer and largest exporter of rice with a 40 per cent market share, has created turbulence in the global rice market following restrictions on rice exports imposed by the government.

In September 2022, India prohibited export of broken rice, while export duty was imposed on paddy, brown rice and non-Basmati white rice. In July 2023, non-Basmati white rice export was prohibited. This followed the ban on wheat in May 2022 after heatwave reduced production and tightened the supply-demand equation. Sugar export too was suspended in order to ensure adequate domestic availability.

Tough decision

Was India’s rice export ban avoidable? A combination of factors contributed to the tough decision. Aberrations in the South-West monsoon and deficient rains in key growing areas of eastern India because of El Nino resulted in production falling short of target even as the government estimate was widely seen as overstated. This led to a gradual tightening of market fundamentals that stoked food inflation risk. India runs the world’s most ambitious welfare programme — the National Food Security Mission. There was also the political compulsion as elections in key States were approaching. In a sense, the situation left little choice for the government but to prohibit export of non-Basmati rice.

Given India’s large share in the world export market, several countries dependent on Indian rice were upset. India was slammed for practising ‘protectionism’. While the criticism is understandable, it fails to appreciate the fact that India exported record quantities of rice even during the pandemic years 2020-2021 when the world faced massive supply disruption.

It is important to recognise that global policy-making is becoming increasingly complex. Policymakers have to judiciously balance domestic socio-economic and political compulsions on the one hand with international commitments and obligations on the other. Given the dominant position of a supplier country like India, any protectionist measure is sure to exert adverse effects on the global market. Therefore, such measures are resorted to in extreme cases only. Recently, India government allowed limited exports to a few developing countries.

India’s farm sector faces a triple challenge — land constraints, water shortage and climate change. If not addressed with urgency, these can potentially compromise the country’s food security over time. Indian agriculture needs a clear, positive direction to register sustained growth in sustainable ways. This calls for ‘creative disruption’ through appropriate research and investment support.

For Indian agriculture, 2022 and 2023 may be considered watershed years. Adverse weather has affected, among others, rice and wheat production two years in a row. It would be imprudent to assume that weather will turn benign in the coming years. If anything, it could get worse.

So, what’s the outlook for Indian rice in 2024? Controls on commercial exports of non-Basmati rice are most unlikely to be eased anytime soon. Export controls are likely to be lifted only by September 2024, subject of course to a satisfactory South-West monsoon and good crop prospects.

However, uncertainties may stymie production growth. In the event, India’s rice export surplus may shrink further. India will continue to face the adverse effects of grain mono-cropping in high-input regions such as Punjab and Haryana where soil health has deteriorated and the water table has gone down to alarmingly low levels. Some area in these regions may have to move out of the rice-wheat-rice cycle to ensure crop rotation and ecological protection. Interestingly, around 80 per cent of world rice production, consumption and trade takes place within Asia. That calls for forming an ‘Asia Rice Alliance’ for closer cooperation among Asian nations in trade, investment and research.

The writer is a policy commentator and agribusiness specialist. Views are personal

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