Amidst concerns over domestic rice prices and the need to maintain food security, the Union government of India has enacted measures to regulate rice exports. This comes in response to a notable decline in rice production during the Rabi season of 2022-2023. According to the Department of Agriculture and Farmers Welfare, rice production witnessed a 13.8% drop, amounting to 158.95 lakh tonnes, compared to 184.71 lakh tonnes produced in the previous Rabi season of 2021-2022. Additionally, Kharif sowing data highlights an expansion in rice cultivation, with 384.05 lakh hectares sown as of August 25, marking an increase from the 367.83 lakh hectares sown during the same period the previous year. Anticipation of El Nino effects impacting the forthcoming crop arrivals coupled with a current increase in paddy prices—rising from ₹27 to ₹33 per kg—has prompted the government to intervene.
India’s Leading Role in Rice Exports
As the world’s largest rice exporter with a 45% global market share, India’s rice exports hold significant sway in the international market. Notably, rice exports for April-May 2023 showed a 21.1% increase compared to the same period in the previous financial year. The surge was particularly pronounced in Basmati rice, which experienced a 10.86% increase in exports for May 2023 compared to May 2022. The export of non-Basmati rice has also shown consistent growth over the past three years, while Basmati rice exports for the ongoing fiscal year exceeded the figures for the preceding year. Data provided by the government reveals a 15% rise in total rice exports (excluding broken rice) up until August 17, reaching 7.3 million tonnes, compared to 6.3 million tonnes during the corresponding period in the previous year. Global rice production concerns, including reduced output projections in Thailand and suspension of raw rice exports in Myanmar, contribute to the global context.
Impact on Indian Farmers and Consumers
To support farmers, the government has raised the Minimum Support Price (MSP) for rice, resulting in paddy procurement at rates surpassing the MSP. Consequently, farmers can expect stable prices, and there is a reduced risk of significant price surges. By restricting exports, the government aims to ensure that rice prices in the domestic market remain controlled. While there might be a slight uptick in rice prices at present, the long-term scenario promises secure availability and controlled prices for domestic consumers.
Government Measures and Exporter Perspectives
The Union government has implemented several measures to address the situation. Prohibitions have been placed on the export of white (non-basmati) rice, along with the imposition of a 20% export duty on par-boiled rice until October 15. However, exports of Basmati rice are permitted for contracts exceeding a value of $1,200 per tonne. The export of broken rice has been banned since the previous September, though exceptions exist for countries requiring rice to meet their food security needs.
Rice exporters acknowledge the competitiveness of Indian par-boiled rice in the global market, even with the 20% export duty. They assert that during bullish periods in the global rice market, higher prices are absorbed due to strong international demand. Indonesia, a rice-exporting nation, has turned to rice imports due to market dynamics. Exporters advocate for a more nuanced approach in export policy decisions, suggesting that rice classifications be based on common rice and specialty rice rather than Basmati and non-Basmati categories. Notably, 12 rice varieties possess Geographical Indication (GI) recognition, and exporters propose their insulation from general market interventions. In the case of Basmati rice, some exporters recommend continuous exports or the establishment of a minimum value for exports at $900 per tonne, citing its specialty status and the impending influx of new crop arrivals.
UPSC Mains Questions
- How has the decline in rice production during the current Rabi season impacted domestic and global rice markets?
- What factors contribute to India’s dominance in the international rice export market, and how might the current export restrictions influence this position?
- Assess the perspectives of rice exporters regarding the classification of rice for export policy decisions. How might this proposed classification impact India’s overall rice export strategy and market stability?
