India’s ban on the export of non-Basmati rice on July 20 has sent shockwaves among the rice-consuming community in the US. The sudden prohibition has led to a price rise and several stores across the country have begun limiting the number of rice bags one buys.
The USA Rice Federation — the nation’s apex trade body on the foodgrain — believes the ban could impact as much as 80 percent of India’s rice exports and affect global food security.
Mani Krishnan — founder of Shastha Foods, which supplies dosa batter hundreds of Indian grocery stores and large supermarket chains — spoke to indica about the impact of the ban on his business and on consumers of rice and rice products in the US.
Shastha Foods imports approximately 1000 tons of rice for ready-to-use rice-lentil batters for dosa, idli, and a wide variety of food products from India that are sold by his firm, which was founded in 2003.
“It is time for US consumers to experiment with other varieties of rice that can still be imported legally,” he told indica. “I am confident we will tide over this situation.”
In late 2022, India implemented a ban on broken rice and an export tariff on non-basmati and non-parboiled rice. However, it still shipped enough rice to break their own export record at 22.5 million metric tons. In the second week of July, the ‘USDA Grain: World Markets and Trade Report’ had projected Indian rice exports to rise again in 2023-24 to a record 23 million metric tons, signaling excess domestic supplies.
In an interview with Reuters, B.V. Krishna Rao, president of India’s Rice Exporters Association, said, “The government is holding more stocks than needed for welfare schemes. There is no need to restrict exports.”
Krishan said that the rice ban is shocking but not surprising. “The rumors were very much in the air,” he said. “The rice ban is likely to continue till Diwali (November 2023).”
He said the impact of the ban on his business is mixed. “In the last couple of years, imports of non-Basmati white rice have been substantial. The ban has impacted white raw rice, but there are other varieties of rice. We are reinventing ourselves. We use other varieties of rice for our batter. We have been balancing our stock and experimenting with new rice not only from India but other countries as well, including the US.”
He said India’s rationale is understandable. “Any government considers the country’s food security for policy positions. There were heavy floods in North India. There was a worry in terms of the kharif crop not meeting next year’s target. Then, there is the war in Ukraine causing continuous foodgrain disruption. India perhaps needed this to control inflation, too. The government may review the situation, but I don’t think it will be reviewed before Diwali.”
On its website, Shastha Foods has set up a separate section to provide customers with “Shortage Instructions”. A message on the website says: “Due to a ban on most rice items from India, we are limiting rice quantities (1 sku/order), so that maximum customers can benefit.”
Krishnan said there is unnecessary panic. “Basmati rice is not banned and it is not like a complete ban on all rice exports. There is panic buying as consumers feel rice won’t be available.”
He said he has raised the unit prices by a few cents. “We do not believe in building a castle on somebody else’s grave. We faced the same thing during the pandemic, and we did not see a price rise. We have a responsibility towards our customers and we will continue to fulfil that. We want to support the community, as they have supported us for these 20 years.”
How does one of America’s largest rice suppliers plan to deal with the shortfall? “We are working feverishly to come up with alternative solutions,” Krishnan said. “In the next three months, we will be importing rice from India, which is legally permissible, and still continue to make sure people’s palates and habits are not affected. That is the kind of guarantee that I want to give to my customers.”
He said Shastha Foods is looking at Vietnam, Myanmar, and Thailand to import rice.
Though Krishnan feels the ban has no geopolitical overtones, USA Rice Federation’s policy committee has strongly criticized the ban. It said the move is political in nature, and that it will take up the matter with the Biden administration.
India’s Rice Exporters Association also alleged that the government is holding more stock than needed for welfare schemes and there is no need to restrict exports.
Krishnan, however, does not agree with these accusations. “The Indian government anticipated a disruption in the domestic supply chain due to the Russia-Ukraine war, monsoon, etc, and has taken this preventive measure so that Indians not affected adversely. Food security is important, and will continue to be in the next century.”
Krishnan recommended that rice consumers in the US should try other varieties of rice that are not affected by the ban. “The ban is on non-Basmati white rice, but other varieties like boiled and parboiled rice are not impacted. There are still many varieties to choose from. You can switch to other varieties like brown and red rice, and you can opt for millets.”
“As someone who has been importing rice for the last 20 years, I am confident we will tide over the situation. It will be a short-term disruption, but in the long term, I am sure we will keep the flow going,” he reiterated.