IMF Warns India’s Rice Export Ban Could Worsen Food Price Inflation

'We would encourage the removal of these type of export restrictions'

A worker packs a sack filled with rice on the outskirts of the western Indian city of Ahmedabad on Feb. 27, 2015. (Amit Dave/Reuters)

The International Monetary Fund (IMF) has warned that India’s restriction of certain types of rice could exacerbate global inflation of food prices.

The IMF’s chief economist, Pierre-Olivier Gourinchas, told a news conference on July 25 that India’s new export restrictions on non-basmati white rice, implemented on July 20, could drive up prices in other countries.

“In the current environment, these types of restrictions are likely to exacerbate volatility on food prices in the rest of the world, and they can also lead to retaliatory measures,” Mr. Gourinchas said.

“We would encourage the removal of these type of export restrictions because they can be they can be harmful globally.”

Grain Prices Highest in 11 Years

Rice is a staple for about half of the world’s population—about 3 billion people. Nearly 90 percent of rice is produced in Asia.

Global grain prices are already at an 11-year high, and Mr. Gourinchas noted that global grain prices could rise 10 to 15 percent this year.

India’s rice exports account for more than 40 percent of the world’s total exports. The country exports rice to more than 150 countries.

Any reduction in India’s shipments would increase upward pressure on food prices, which are already rising because of erratic weather and Russia’s invasion of Ukraine in 2022.

People plant rice saplings at a water-logged rice field on the outskirts of Amritsar on June 19, 2023. (Narinder Nanu/AFP via Getty Images)

India has already banned broken rice exports, a policy put in place in 2022.

The rice categories now subject to India’s export ban—non-basmati white and broken rice—accounted for about 10 million tons of a total of 22 million tons of Indian rice exports in 2022.

“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,” India’s food ministry said in a statement upon implementing the non-basmati rice export ban.

The food ministry cited an 11.5 percent increase in retail prices over 12 months.

It also noted that parboiled non-basmati rice and basmati rice, which is the bulk of its exports, wouldn’t be subject to any export bans.

Other critics of India’s move have also weighed in on the issue.

“India would disrupt the global rice market with far greater velocity than Ukraine did in the wheat market with Russia’s invasion,” B.V. Krishna Rao, president of the Rice Exporters Association, recently told Reuters. “The sudden ban on exports would be very painful for the buyers, who can’t replace the shipments from any other country.”

Fear of shortages could also prompt countries to stockpile supplies.

Reuters contributed to this report.