India bans non-basmati rice export with immediate effect

India has prohibited the export of non-basmati white rice with immediate effect, according to a government notice on Thursday, after a late start to seasonal monsoon rains hurt the crop and raised fears of a production shortfall.

The late arrival of the monsoon led to a large rain deficit up to mid-June. And while heavy rains since the last week of June have erased the shortfall, they have caused significant damage to crops.

"In order to ensure adequate availability of non-basmati white rice in the Indian market and to allay the rise in prices in the domestic market, the government of India has amended the export policy of above variety," a government statement said.

Retail rice prices have risen 11.5 per cent over the past year and 3 per cent over the past month, it added.

India accounts for more than 40 per cent of world rice exports but low inventories mean any cut in shipments will fuel food prices driven up by Russia's invasion of Ukraine last year and erratic weather.

"India would disrupt the global rice market with far greater velocity than Ukraine did in the wheat market with Russia's invasion," BV Krishna Rao, president of the Rice Exporters Association told Reuters.

Rice is a staple for more than 3 billion people, and nearly 90 per cent of the water-intensive crop is produced in Asia, where the El Nino weather pattern usually brings lower rainfall. Global prices are already hovering at their highest level in 11 years.

"The sudden ban on exports would be very painful for the buyers, who can't replace the shipments from any other country," Rao said.

While Thailand and Vietnam don't have enough inventories to plug the shortfall, African buyers would be most affected by India's decision, Rao said, adding that many countries will request New Delhi resume shipments.

Heavy rain in northern parts of India over the last few weeks has damaged newly planted crops in states including Punjab and Haryana, and many farmers have had to replant.

Rice paddy fields in northern states have been submerged for over a week, destroying newly planted seedlings, and forcing farmers to wait for waters to recede so they can replant.

In other major rice-growing states, including West Bengal, Bihar, Chhattisgarh, Andhra Pradesh and Telangana, farmers have prepared paddy nurseries but have been unable to transplant the seedlings due to inadequate rainfall.

The area under rice cultivation had been expected to increase after New Delhi raised the rice purchase price, but industry officials now estimate a marginal decrease. Farmers so far have planted rice paddy on an area 6 per cent smaller than in 2022.