Article:
India experienced an impressive increase in both rice and wheat production in 2022, catapulting the country to an all-time high in these commodities’ output, as confirmed by the Ministry of Agriculture and Farmers Welfare. However, the agricultural sector also witnessed a significant upheaval due to several supply-side strategies such as export restrictions and trade controls. The implementation of a Minimum Export Price (MEP) on basmati rice shipments is one such measure aimed at controlling domestic prices.
Government Measures to Control the Export of Rice and Wheat
In May 2022, the Indian government took decisive steps to manage the country’s grain surplus. It began with the prohibition of wheat export. September witnessed further restrictions with the banning of broken rice exports and the imposition of a 20% duty on all white (non-parboiled) non-basmati grain shipments.
As 2023 rolled in, more controls were set in place. In July, only parboiled non-basmati and basmati rice exports were allowed following the ban on white non-basmati rice exports. August saw the introduction of a 20% tax on all parboiled non-basmati rice exports. Later that month, authorities instructed the Agricultural & Processed Food Products Exports Development Authority not to issue certificates for any basmati rice consignments priced at or above USD 1,200 per tonne.
Rice and Wheat Production in India
India witnessed a steady rise in rice production over the years, culminating in a record-high 135.54 million tonnes in 2022-23. Counter to expectations, the government imposed export restrictions on rice, including prohibiting broken rice exports and the imposition of a 20% duty on non-basmati grain shipments.
While wheat production experienced a temporary dip, it made a comeback in 2022-23, reaching 112.74 million tonnes. Simultaneously, the government implemented bans on wheat exports, signifying its intention to maintain domestic availability.
Factors Influencing Export Restrictions
Interestingly, despite record-breaking production, the country experienced surges in retail food inflation and open market prices. This prompted the government to take action to stabilize domestic prices, primarily by reducing or halting exports.
Challenges and Impacts of Export Controls
While the measures taken aimed to manage domestic supply, they were not without issues. Misclassification allowed evasion of controls, with white non-basmati rice finding its way onto the market under the codes of parboiled and basmati rice. Further, high open-market prices remained persistent even after the implementation of export restrictions.
Strategies for Streamlining Exports and Stabilising Prices
Experts advocate for the implementation of a uniform MEP for all types of rice as a solution to these challenges. A unified floor price could encourage the export of premium rice varieties, benefiting producers while maintaining domestic food security.
About Rice and Wheat Cultivation in India
Rice is a significant part of most Indian diets and requires a high temperature and rainfall, making it a staple in regions with such climates. The leading producers are West Bengal, Uttar Pradesh, and Punjab. On the other hand, wheat grows best under cool conditions with ample sunshine during ripening, making it a primary crop in the north and north-western parts of the country. Key wheat producers are Uttar Pradesh, Madhya Pradesh, Punjab, Haryana, Rajasthan, Bihar, and Gujarat.
To conclude, while India stands as a leading global producer of both rice and wheat, managing the balance between export and domestic supply remains a complex task requiring strategic policymaking.