India's rice export ban: The Asian countries set to be hit hard — and those that’ll profit

India, the world's largest atom exporter, has banned shipments of breached atom — a determination that volition reverberate crossed Asia, according to Nomura.

In a bid to power home prices, the authorities banned exports of breached rice and slapped a 20% export taxation connected respective varieties of atom starting Sept. 9. 

Nomura said the interaction connected Asia volition beryllium uneven, and the Philippines and Indonesia volition beryllium astir susceptible to the ban. 

India accounts for astir 40% of planetary atom shipments, exporting to much than 150 countries.

Exports reached 21.5 cardinal tons successful 2021. That's much than the full shipment from the adjacent 4 biggest exporters of the atom — Thailand, Vietnam, Pakistan and the United States, Reuters reported. 

But accumulation has decreased by 5.6% year-on-year as of Sept 2. in airy of below-average monsoon rainfall, which affected harvest, Nomura said.

For India, July and August are the "most crucial" months for rainfall, arsenic they find however overmuch atom is sown, said Sonal Varma, main economist astatine the fiscal services firm. This year, uneven monsoon rainfall patterns during those months person reduced production, she added.

Big rice-producing India states specified arsenic West Bengal, Bihar and Uttar Pradesh are receiving 30% to 40% little rainfall, Varma said. Although rainfall accrued toward the extremity of August, "the much delayed the sowing [of rice] is, the greater is the hazard that output volition beryllium lower." 

Earlier this year, the South Asian nation curbed wheat and sweetener exports to power rising section prices arsenic the Russia-Ukraine warfare sent planetary nutrient markets into turmoil.

The Indian authorities precocious announced that atom accumulation during the Southwest monsoon play betwixt June and October could autumn by 10 to 12 cardinal tons, which implies that harvest yields could dip by arsenic overmuch arsenic 7.7% twelvemonth connected year, Nomura said.

"The interaction of a atom export prohibition by India would beryllium felt some straight by countries that import from India and besides indirectly by each atom importers, due to the fact that of its interaction connected planetary atom prices," according to a study by Nomura released recently. 

Findings from Nomura revealed that the outgo of atom has remained precocious this year, with the summation successful prices successful retail markets hitting astir 9.3% twelvemonth connected twelvemonth successful July, compared with 6.6% successful 2022. Consumer terms ostentation (CPI) for atom besides spiked 3.6% year-on-year arsenic of July, up from 0.5% successful 2022. 

The Philippines, which imports much than 20% of its atom depletion needs, is the state successful Asia astir astatine hazard of higher prices, Nomura said.

As Asia's biggest nett importer of the commodity, atom and atom products relationship for a 25% stock of the country's nutrient CPI basket, the highest stock successful the region, according to Statista.

Inflation successful the state was astatine 6.3% successful August, information from the Philippines Statistics Authority showed — supra the cardinal bank's people scope of 2% to 4%. In airy of that, India's export prohibition would travel arsenic an further stroke to the Southeast Asian nation.

Similarly, India's atom export prohibition volition beryllium detrimental to Indonesia arsenic well. Indonesia is apt to beryllium the second-most affected state successful Asia.

Nomura reported that the state relies connected imports for 2.1% of its atom depletion needs. And atom makes up astir 15% of its nutrient CPI basket, according to Statista.

For immoderate different Asian countries, however, the symptom is apt to beryllium minimal.

Singapore imports each of its rice, with 28.07% of it coming from India successful 2021, according to Trade Map. But the state isn't arsenic susceptible arsenic the Philippines and Indonesia arsenic "the stock of atom successful the [country's] CPI handbasket is rather small," Varma noted. 

Consumers successful Singapore thin to walk "a greater chunk" of their expenses connected services, which typically seems to beryllium the lawsuit for higher-income countries, she said. Low- and middle-income countries, connected the different hand, "tend to walk an adjacent larger proportionality of their expenses connected food." 

"The vulnerability needs to beryllium seen from the position of some the interaction connected expenditure for consumers and however babelike countries [are] connected imported nutrient items," she added. 

On the flip side, immoderate countries could beryllium beneficiaries.

Thailand and Vietnam volition astir apt to nett from India's ban, Nomura said. That's due to the fact that they're the world's second- and third-largest exporters of rice, making them the astir apt alternatives for countries looking to capable the gap.

Vietnam's full atom accumulation was astir 44 cardinal tons successful 2021, with exports bringing successful $3.133 billion, according to a report published successful July by probe steadfast Global Information found.

Data from Statista showed that Thailand produced 21.4 cardinal tons of atom successful 2021, an summation of 2.18 cardinal tons from the erstwhile year.

With the summation successful exports, and India's prohibition placing an upward unit connected atom prices, the wide worth of atom exports volition summation and these 2 countries volition payment from it. 

"Anybody who's presently importing from India volition beryllium looking to import much from Thailand and Vietnam," Varma said.