homeeconomy NewsFear of subpar rice harvest has led to export bans — the impact and a warning on 'overproduction'
Fear of subpar rice harvest has led to export bans — the impact and a warning on 'overproduction'
The rice crop is feared to be subpar this year due to excessive rains in the north and late rains in the south. The government wants to ensure food security and inflation control, especially because it is an election year.
India banned the export of rice on July 20, which has led to a sharp rise in rice prices the world over. India accounts for 40 percent of global rice exports. However, the export of only non-basmati white rice and broken rice is banned, which account for 45 percent of India’s total rice exports. Basmati and parboiled rice exports continue.
The reason for the ban:
The rice crop is feared to be subpar this year due to excessive rains in the north and late rains in the south. The government wants to ensure food security and inflation control, especially because it is an election year.
What experts say
According to Ashok Gulati, Professor at Indian Council For Research on International Economic Relations (ICRIER), India is overproducing rice, which is impacting water availability.
“Rice area planted as of today is more than that of last year. Our procurement has always been way above what we need on rice. We are overproducing. But because we are producing so much rice, in Punjab for example, the water table is being depleted like anything and creating greenhouse gas emissions,” he said.
Gulati added that vegetable prices spike during the rainy season, therefore, it is not a new phenomenon. He said that to control prices, Operation Green was launched and Operation TOP (tomatoes, onion, potatoes) was launched earlier and then it was expanded.
“It was given to the Ministry of Food Processing, basically to stabilise the value chain. It hasn't worked so far. Nobody knows what's happening there in any big way,” he said.
Reflecting on tomato prices specifically, Gulati, Former Chairman of the Commission for Agricultural Costs and Prices, said his estimate is June inflation of tomatoes was minus 34 percent. “July numbers are yet to come and that inflation will be in three digits. It can be even higher.”
He expects prices to subside towards the latter half of August as the new crop starts coming from Maharashtra. In fact, in the last week of August and September-October they will be under control, he said.
Gulati, however, said that he’s a little concerned about wheat and the milk sector because that has a big weight in the overall CPI basket.
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Also Read: India's manufacturing PMI edges slightly lower in July, new order growth remains elevated
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