Agri Commodities Rice

GOI May Review Blanket Ban On Broken Rice Exports If Procurement Steadies

GOI May Review Blanket Ban On Broken Rice Exports If Procurement Steadies

Located in Asia, India is the largest rice exporter in the world and ranks second, behind Brazil when it comes to rice production. Favorable climatic conditions help the country produce ample quantities of rice every year and owing to this, the Asian nation exports rice to more than 150 countries around the world and plays a vital role in helping them meet their consumption needs. 

However, 2022 has been a bit different in this regard. While some regions of the country witnessed record rainfall that led to unprecedented flooding, the eastern states like Bihar, West Bengal, Punjab and Uttar Pradesh that have the highest intensity of paddy cultivation suffered a rainfall deficit. 

This forced the largest rice exporter to take steps to ensure adequate stocks for domestic consumption. As a result, the Government of India on 8th of September 2022, banned exports of broken rice and imposed a 20% duty on exports of all varieties of non-basmati rice except parboiled rice.  Consequently, Indian rice became uncompetitive in the global market and this adversely affected the rice suppliers and Rice Exporters of the country.

However, with the procurement of rice progressing steadily and prices beginning to moderate, experts are of the opinion that the Government of India might review its blanket ban on exports of broken rice. While a complete lifting of the ban would still be a rare possibility, experts believe that the Government of India might allow broken rice exports with imposition of duty.

Why Did The Government Of India Ban Broken Rice Exports?

The rice producing states of India faced low monsoon rainfalls this year. As a result, the production of paddy suffered and owing to low domestic output, the Government of India imposed a blanket ban on broken rice exports. The GOI took such a stance to stabilize domestic prices of the commodity and ensure adequate availability in the domestic market for ethanol and poultry industries in particular. 

Broken Rice Exports Prior To The Ban

Broken rice majorly was used to feed animals and had a huge significance in the poultry industry. Before the GOI’s ban on broken rice exports, India’s broken rice shipments soared by 4,178 per cent in April to August of FY 23 in comparison to the same period in 2019.

The data suggest that in the FY 22, around 1.6 million tonnes of broken rice which corresponds to over 41 per cent was exported by the Asian nation to China.

The Current Situation

While the ban on broken rice might seem necessary at that point of time given the domestic situation, experts are of the opinion that the country can now resume broken rice exports once again. Present market conditions suggest the same. Softening of domestic prices and steady start to 2022-23 procurement season provides ample base to the government to lift the ban. It is because of this, that rice millers from southern part of India have started raising demands for review on broken rice exports which have prompted the government to think in this regard.

Conclusion

India-the biggest rice exporter in the world, imposed a blanket ban on exports of broken rice to stabilize price and ensure adequate supplies for domestic needs. However, with the improving situation on the domestic front, the GOI is mulling whether it should do away with the ban. While experts believe that it might be too early for an outright lifting, they are hopeful that the government will allow broken rice exports albeit with some duty. 

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