In the international food market, any "wind blowing" may make people tense their nerves.


Recently, India, the world's largest rice exporter, announced the imposition of export duties on rice, what does this mean for the global food market? Will it affect the price of rice in the international market?


After wheat and sugar, India's rice "shot"


The Indian government announced on September 8 that from September 9, it will impose a 20% export tax on rice, except for steamed grain rice and Indian aromatic rice, and ban the export of broken rice.


According to the Wall Street Journal, India's Ministry of Agriculture said the lack of monsoon rains in June and erratic rains in July and August in India's major grain-producing states of Uttar Pradesh, West Bengal and Bihar led to a 13% reduction in the area under rice cultivation to more than 23.1 million hectares from 26.7 million hectares in the same period the previous year.

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On the one hand, rice production may decline, on the other hand, India's domestic cereal inflation is serious.


India's Central Statistics Office statistics, August India CPI rose to 7% from 6.71% in July, ending a three-month downward trend. Among them, the price of grains and their products rose by 9.57%.


According to the Financial Times, India's International Economic Relations Research Council Professor Ashok Gulati (Ashok Gulati) said that export restrictions will "help curb domestic grain inflation.


For domestic supply shrinkage and inflation concerns, the export ban on broken rice and new export tariffs has been the third major initiative to limit food exports from India this year.


After the hottest March and April in India in more than 100 years, India restricted wheat and sugar exports in May amid concerns that agricultural production across the country was hit by the heat wave.


Export taxes imposed to drive up rice prices in Asia


Data from Statista, a comprehensive global data repository, shows that the world's leading rice exporters in 2021 will be India, Vietnam, Thailand, Pakistan and the United States. India, the world's top rice exporter, accounts for 40% of global rice exports. Last year, India's rice exports reached a record 21.5 million tons.


According to Reuters, a global trading company distributor in Mumbai said India has been the cheapest supplier of rice, which has to some extent protected African countries such as Nigeria, Benin and Cameroon from rising wheat and corn prices.


But the imposition of the export tax has "increased the cost of Indian rice exports, and since India accounts for 40 percent of global rice exports, it is likely to drive up rice prices on the international market." Li Guoxiang, a researcher at the Institute of Rural Development, Chinese Academy of Social Sciences, told reporters.


According to Bloomberg, BV Krishna Rao, chairman of the Indian Rice Exporters Association, expects that the export price of white rice could exceed $400 per ton, compared with the current FOB price of $350.


"The rise in rice prices will increase the economic burden and make survival more difficult for low-income food-deficit countries." Li Guoxiang said, but China's rice supply is relatively surplus, India's move will not affect the supply structure of China's rice, and the impact on China's rice prices will be minimal.


Peng Chao, director of the Rural Revitalization Research Center of the Management Cadre Institute of the Ministry of Agriculture and Rural Development, also believes that the rise in international rice prices will have a small impact on the domestic market. "Although China is the world's top rice importer, it only imported 4.96 million tons in 2021, accounting for only about 3.4 percent of total production. Moreover, the concentration of our rice import sources is not high."


But there are concerns within India that the move could affect the position of Indian rice in the world market.

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"The varieties now subject to export duties account for about 60 percent of India's non-basmati rice shipments. This restriction will benefit rivals Thailand and Vietnam, which are working together to prop up rice prices." BV Krishna Rao said.


What is the impact of the export ban on broken rice on the country?


In addition to imposing export taxes on rice other than steamed grain rice and Indian aromatic rice, this time India has also banned exports of broken rice.


According to the Wall Street Journal, in the last fiscal year ending in March this year, India exported about 3.8 million tons of broken rice to the world, accounting for about one-fifth of its total non-basmati rice exports. 1.4 million tons of this cheap commodity was exported from April to June, accounting for about one-third of non-basmati rice exports.


The "export ban" on Indian broken rice also had an impact on international broken rice prices.


According to Reuters, traders said that as Indian exporters stop signing new contracts, buyers are trying to get supplies from rivals Thailand, Vietnam and Myanmar, which have raised the price of 5 percent broken rice by about $20 per ton over the past four days (Sept. 8 to Sept. 11, local time).


The Wall Street Journal also reported that China is the largest buyer of Indian ground rice, mainly for animal feed and wine production.


According to the Wisdom Research report, Chinese customs data show that China imported 666.666 tons of brown rice in 2021; China imported 2,395,760.186 tons of refined rice; and China imported 25,153,321.889 tons of broken rice. The import volume of broken rice exceeds that of refined rice and brown rice.


India this ban on the export of broken rice, will affect the supply of broken rice in China? In Li Guoxiang's view, "China can completely import from other countries or use other things for feed, and Indian broken rice is a stronger alternative."