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Experts say if left unchecked Malaysia could feel pinch of India’s rice ban within weeks

A man compares different grains of rice at a wholesale market in Navi Mumbai, India, August 4, 2023. — Reuters pic

KUALA LUMPUR, Aug 27 — The clock is ticking for Malaysia as it braces for the possible impact of India’s non-basmati rice export ban, and if left unchecked, experts believe Malaysia’s local market could feel the pinch within weeks.

Philippines, Malaysia and Vietnam are the biggest importers of rice from India and would now have to find other avenues for supply or rely on different types of rice varieties.

Economist Nur Ameera A. Jaz from the Centre for Foundation Studies in Science at University Malaya felt Malaysia could hold out for another two to three months based on existing stockpiles of rice. However a rise in price is imminent.

“Padiberas Nasional Bhd’s (Bernas) is supposed to maintain 290,000 metric tonnes of rice stockpiled. Thus we might not experience any repercussions within the two to three-month period and appear to be well positioned in this regard,” she told Malay Mail.

“The pace of discovering fresh rice sources and the market’s response also contribute. Therefore, we could anticipate feeling the effects several weeks to a few months after the ban takes effect.”

India is responsible for 40 per cent of the world’s rice exports. On July 20, India’s government announced that it would stop exporting non-basmati white rice, effective immediately. The move was designed to help lower rice prices and secure availability in India.

Exports of parboiled rice, which has been partially boiled; and basmati rice, are still allowed. This sent prices soaring as experts predicted the amount of banned items to be about 15 per cent.

Ameera suggested an additional lifeline had also come in the form of Thailand’s recent offer to supply rice, providing a temporary buffer. However, she said that the ban on non-basmati rice could cause disruptions in the market.

“Malaysia imports rice from various countries, including India, Pakistan, Vietnam, and Thailand. While India’s share is significant, Malaysia’s reliance on multiple sources acts as a safeguard against drastic changes.

“The potential price impact depends on factors such as supply and demand dynamics, consumer preferences, and how effectively Malaysia adapts its sourcing strategy. Although short-term adjustments in non-basmati rice prices are conceivable, especially if demand remains constant and supply is limited, Malaysia’s proactive diversification strategy should aid in maintaining price stability.

“However, it’s important to note that precise projections are challenging due to a lack of specific data. Thus, transparency in data sharing by Bernas becomes crucial to better understand potential price shifts,” said Ameera.

Senior Research Fellow at the Malaysian Institute of Economic Research Shankaran Nambiar echoed Ameera’s sentiments that a price increase was inevitable.

“The impact is going to be tremendous since India is the largest rice exporter in the world. The effects are going to be felt from Africa to Asia. Malaysia will not be an exception especially since Malaysia is highly dependent on Indian rice. Although the ban might be short-lived, it will definitely push up the price of rice.

“Rice is a controlled item in Malaysia. So the effects of what’s happening in India and the actions that the Indian government has taken will be tempered by domestic policies. However, someone will have to pay for the price increase — the government or the household. Again, certain categories of Indian rice, aside from basmati, are not affected. So these categories will be available,” he said when contacted.

Bernas is the main importer of rice to Malaysia. On its website, it states that Malaysia’s domestic paddy production could reach up to 70 per cent self-sufficiency level (SSL) with average Malaysian adults consuming around 80kg of rice per year.

The average imported supply of rice is approximately 750,000 metric tonnes. Hence a price increase could be exponential if we do not have sufficient supply.

Economist Lee Heng Guie felt that since the rice variety was only non-basmati and data on how much non-basmati rice we are consuming is scarce it would be difficult to ascertain when a price hike or if a price increase for rice will happen at all.

“Perhaps in the short term, we’ll see some shortages, maybe the suppliers won’t be able to meet the demand but in the end, food prices are still going to increase regardless.

“This is due to climate change. So India is trying to protect its domestic consumption. India’s actions will impact a lot of people and we need to plan ahead and look at our food security and take quick decisive action,” he said.

India banned the export of non-basmati white rice to “ensure adequate domestic availability at reasonable prices” to prevent a food shortage in India.

The ban did not restrict the export of other types of semi/wholly milled rice, including basmati and parboiled rice. The government hoped that keeping more of the staple in India would drive down domestic prices, which have risen by nearly 12 per cent over the past year.

Apart from that, the massive floods in Pakistan that caused their food inflation to skyrocket to 40 per cent also contributed to India’s decision not to export non-basmati white rice anymore.

Reports and videos of panic buying and empty rice shelves at Indian grocery stores in the US and Canada followed the ban, driving up prices in the process.

https://www.malaymail.com/news/malaysia/2023/08/27/experts-say-if-left-unchecked-malaysia-could-feel-pinch-of-indias-rice-ban-within-weeks/87267 QR Code

Published Date: August 27, 2023

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