IMF warns: India's rice exports ban to intensify global food price volatility

New Delhi, July 26: Pierre-Olivier Gourinchas, IMF's Chief Economist and Director, highlighted concerns about India's recent restrictions on certain rice exports, warning of potential volatility in food prices worldwide. In a press conference after the launch of the World Economic Outlook on Tuesday, he emphasised the harmful effects of export restrictions, urging their removal to prevent negative global impacts.

India's ban on rice exports followed Russia's withdrawal from the United Nations and Turkey-brokered Black Sea grain deal. Gourinchas noted the significance of the Black Sea Grain Initiative, which ensured ample grain supply worldwide, shipping around 33 million tons of grain from Ukraine to the rest of the world and stabilising food and grain prices.

However, with the suspension of the grain deal, the dynamics are reversed, and upward pressure on food prices is anticipated. The IMF economist estimated a 10-15 per cent rise in grain prices.

Last Thursday, the Indian government amended rice export norms, categorising non-basmati white rice as "prohibited." While exports will be allowed on the basis of government permission to countries addressing food security needs, the immediate effect of the change restricts non-basmati white rice exports.

Notably, Benin in West Africa is one of the major importers of non-basmati rice from India, with other destination countries including Nepal, Bangladesh, China, Cote D' Ivoire, Togo, Senegal, Guinea, Vietnam, Djibouti, Madagascar, Cameroon, Somalia, Malaysia, Liberia, and UAE.

This comes after India previously banned broken rice exports in September 2022 and imposed a 20% duty on non-Basmati rice exports, except for parboiled rice. The restriction was later lifted in November due to concerns about low production caused by a decline in paddy crop area.

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