Recently, India has implemented changes to its rice export policies. These changes include a ban on the export of broken rice and an imposed 20% duty on non-Basmati rice exports, excluding parboiled rice. This strategy aims to amplify domestic supplies amidst a decrease in paddy crop area during the current Kharif season.
It’s possible to think of India as a leading figure in the global rice market, representing over 40% of worldwide rice shipments. The country competes with other major rice manufacturers such as Thailand, Vietnam, Pakistan, and Myanmar.
The Role and Importance of Broken Rice
Broken rice plays a significant role in various industries and sectors. It is frequently used in the creation of feed for young animals and pets because of its high caloric content and low fiber. This makes it perfect for all types of livestock.
Moreover, broken rice is a vital ingredient in the brewing industry. It is often combined with barley and used in the production of arak, a type of colourless distilled aniseed alcoholic drink. Not just limited to food and beverages, broken rice also serves as a raw material for rice flour which finds applications in baby food, breakfast cereals, rice wine, rice liqueur, sake, and prepackaged and canned foods.
Rationale Behind the Export Ban
The decision to ban the export of broken rice was shaped by various factors.
Firstly, there was a significant increase in broken rice exports from India. Data shows that there was a 42 times surge, totalling to 21.31 lakh metric tonnes (LMT) during April-August 2022 compared to 0.51 LMT during the equivalent time in 2019. China emerged as the chief buyer of Indian broken rice in 2021-22, consuming a total of 15.85 LMT.
Secondly, there was a scarcity of broken rice in the domestic market. The shortage has impacted both poultry feed and ethanol production, two sectors which previously relied on either broken or damaged food grains.
Thirdly, the global demand for broken rice has escalated due to geopolitical situations affecting commodity pricing.
Lastly, domestic production has been on a decline. The area and production of paddy for the Kharif season of 2022 have shrunk by approximately 6%. The total rice sowing during the current Kharif season has so far been about 20 lakh hectares less than last year due to inadequate rainfall in certain states. Rice production is expected to drop by 10 million tonnes, potentially reaching 12 million tonnes in a worst-case scenario.
The Implication on Biofuels
The recent changes in India’s rice export policies also affect the country’s National Policy on Biofuels. This policy permits the production of biofuels from raw materials including various grains like cassava, damaged wheat, broken rice, rotten potatoes, and sugar beet. These grains, deemed unfit for human consumption, can be turned into valuable sources for ethanol production, following approval from the National Biofuel Coordination Committee. As such, the ban on broken rice’s export could potentially lead to an increase in raw materials for biofuel production within the country.