India is considering broadly banning rice exports due to rising domestic prices. India, the world’s largest rice supplier, is discussing a plan to ban the export of most rice varieties, according to a report by Bloomberg.
It is stated that this step could further increase the already high global rice prices as this ban will affect approximately 80 percent of India’s rice exports.
According to sources, the reason for this ban is the increasing domestic market. prices and the government’s willingness to avoid the risk of further inflation. If implemented, this ban could lower local rice prices, but risks rising global costs.
Rice, which is among the main food source for half of the world’s population, is very important especially for the Asian continent. According to the information compiled from the latest published reports, 90 percent of the global rice supply is consumed by countries in Asia, primarily China and Japan.
However, rice production in India is very important as it accounts for about 40 percent of the global supply. Experts state that if India stops rice exports, serious problems may arise in the supply-demand balance in the food market.
Rice is one of the main foodstuffs in Türkiye. It is a matter of curiosity how Turkey will be affected in case of a possible export restriction by India.
India Leads Türkiye in Rice Imports
The importance of India in the rice industry for both Asia and the world can be understood from the fact that it alone carries 40 percent of the global supply. Well, if this rice giant gives up selling its rice to foreign countries by banning export, how will Turkey be affected by this situation? We searched for you, dear Cryptocoin readers.
According to the “Rice Status Report” published by the Ministry of Commerce and covering the year 2017 as the deadline, Turkey seems to have strengthened its commercial ties with India since the last 2008. In this framework, while Turkey imported only 321 tons of rice from India in 2008, it increased to 22 thousand 100 tons in 2016. In this context, India, which occupied a very low place in Turkey’s rice imports in 2008, became 40 percent of Turkey’s total rice imports in 2016.
In fact, Türkiye is not fully dependent on India for rice imports. Especially Italy, Greece, Bulgaria and recently Thailand are among the other countries where Turkey meets its rice imports. Therefore, in the face of any export restriction, Turkey will have other sellers to knock on its door to buy rice from the foreign market.
However, this may not be as simple as we mentioned. Assuming that in a possible import restriction of India, 40 percent of the global supply will disappear, all rice importing countries, including Turkey, will begin to demand the goods of rice exporting countries. Therefore, prices will rise as supply will fall short of demand and rapid demand growth will stimulate the profit motive of rice sellers. It would not be wrong to say that rice prices will increase rapidly, especially if such a situation is encountered in the future.
Especially in the first 5 months of 2023, Turkey’s food and rice trade with India continues to increase in a very voluminous way. According to the data prepared by the Federation of Turkish Food and Beverage Industry Associations based on TUIK, Turkey imported 282 thousand tons of rice in the first 5 months of 2023, while India took the second place in this ranking. Thailand is in the 1st place.
However, on the basis of amount, Turkey realized a rice import of 184 million dollars in the first 5 months of 2023, while 17.39 percent of this amount includes rice imports from India. Thailand is in the first place.
If we look at Turkey’s rice imports arranged according to years on the basis of amount, it is possible to say that the amount increases and decreases from time to time, depending on both the fluctuations in prices and the variability of domestic production.
In fact, it is possible to see from the table how Turkey diversified its rice imports and turned its face from European sellers to Asian sellers. In this context, the critical developments to be experienced in Asia are very important for rice, which is one of Turkey’s basic foodstuffs. However, since Asia is accepted as a whole, especially by investors, due to the close ties of the countries in the region with each other, it can be expected that a rice crisis in India will spread rapidly to Asia and then to Europe.
Although Europe does not have a high share in rice consumption in general, it is worth remembering that rice is a global food commodity and can be bought and sold through the stock market. In other words, the business is critical not only in terms of food but also in terms of investment.
It can put pressure on inflation
India has not yet made a clear decision to restrict rice exports, but it is difficult to say that food inflation will not rise again in both Turkey and Asia under a possible restriction. Especially Asian and Turkish people, who consume rice as a staple food and keep it at home, may be affected by the increase in rice prices. However, it may be difficult to predict a decrease in rice consumption despite the increase in prices, as we assume that the price elasticity of basic foodstuffs is somewhat lower in accordance with economics.
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