Impact on Philippines, Indonesia, Thailand: Nomura

Nomura said rice production in India fell by 5.6 per cent year-on-year till September due to below-average monsoon rains, affecting the crop.

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According to Nomura, India, the world’s largest rice exporter, has banned shipments of broken rice – a move that will resonate across Asia.

To control domestic prices, the government banned the export of broken rice and imposed a 20% export tax on several varieties of rice with effect from 9 September.

Nomura said the impact on Asia would be uneven, and the Philippines and Indonesia would be most vulnerable to the sanctions.

India accounts for about 40% of global rice shipments, which exports to more than 150 countries.

Exports reached 21.5 million tonnes in 2021. This is more than the total shipments from the next four largest exporters of the grain – Thailand, Vietnam, Pakistan and the United States, Reuters reported.

Nomura said production has declined by 5.6 per cent year-on-year till September 2 in light of below-average monsoon rains, affecting the crop.

For India, July and August are the “most critical” months for rains, said Sonal Verma, chief economist at the financial services firm, as they determine how much rice is sown. He said the uneven monsoon rain pattern during those months this year has reduced production.

Major rice producing states of India like West Bengal, Bihar and Verma said that Uttar Pradesh is receiving 30 to 40 per cent less rainfall. Although rainfall increased in late August, “sowing was delayed”. [of rice] The higher the risk, the lower the yield.”

Earlier this year, the South Asian nation shredded wheat and sugar exports to control rising local prices. The Russo-Ukraine war plunged global food markets into turmoil.

worst hit

India's rice production likely to decline this year, says asset management firm

Similarly, India’s rice export ban would be detrimental to Indonesia as well. Indonesia is likely to be the second most affected country in Asia.

Nomura pointed out that the country is dependent on imports for 2.1% of its rice consumption needs. According to Statista, rice makes up about 15% of its food CPI basket.

For some other Asian countries, however, the pain is likely to be minimal.

According to the trade map, Singapore imports all its rice, of which 28.07% comes from India in 2021. But this country is not as vulnerable as the Philippines and Indonesia, as much as “the share of rice in India”. [country’s] The CPI basket is quite small,” Verma said.

Consumers in Singapore spend “a substantial portion” of their spending on services, which is typically the case with high-income countries, she said. On the other hand, low- and middle-income countries “spend a substantial portion of their spending on food.”

“The impact on spending for consumers and how the vulnerability needs to be looked at from the perspective of both dependent countries [are] on imported foods,” she said.

countries that will benefit

On the other hand, some countries may be beneficiaries.

Nomura said Thailand and Vietnam would benefit the most from India’s sanctions. This is because they are the world’s second and third largest exporters of rice, making them the most likely choice for countries to fill the gap.

Vietnam’s total rice production in 2021 was approximately 44 million tonnes, with exports at $3.133 billion, a . According to report good The research firm Global Information, published in July, found.

Statista data showed that Thailand produced 21.4 million tonnes of rice in 2021, an increase of 2.18 million tonnes from the previous year.

With the increase in exports and the upward pressure on rice prices from India’s sanctions, the overall value of rice exports will increase and both these countries will benefit from it.

“Anyone who is currently importing from India wants to import more from Thailand and Vietnam,” Verma said.

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