The Centre instituted a ban on the export of broken rice. Additionally, it mandated an export duty of 20% on rice in the husk (paddy or rough), husked (brown rice), and semi–milled or wholly–milled rice.
IMPACT OF STEP
- The measure would ensure adequate availability of broken rice for consumption by the domestic poultry industry and other animal feedstock
- It would sustain the production of ethanol which would further assist the successful implementation of the Union government’s Ethanol Blending Programme.
BAN AND INFLATION CONTAINMENT
- The lower the supply of a commodity the higher would be the price of a product, which results in inflationary pressures. The adequacy of rice stocks in the country would ensure that markets do not experience excess demand and thus, trigger an abrupt price rise.
- The consumer price index or retail-based inflation stood at 7% in Aug this year with rural and urban inflation scaling 7.15% and 6.72% respectively.
- COVID 19 PANDEMIC IMPACT –it also had an impact on India's previously held surplus as a reaction to the distress caused by the pandemic to vulnerable sections Union Cabinet introduced a food security program called Pradhan Mantri Garib Kalyan Anna Yojana in March 2020. The scheme was extended for another six months until Sep 2022.
- The scheme provisions an additional 5 kg ration per person each month in addition to their normal quota of food grains under the National Food Security Act.
- It is reported this week that food grain stocks in the Food Corporation of India central pool had dropped 33.5% on a year over –year basis to 60.11 million tonnes prompting doubts on the continuation of the scheme.
- Rice is a water-intensive crop that also requires a hot and humid climate and prolonged sunshine.
- It is for this reason that the eastern and southern regions of the country, with sustainable humidity and suitable mean temperatures, are deemed favourable for the crop.
- While two regions can grow paddy crops throughout the year, higher rainfall and temperature prompt the northern regions to grow only one crop of rice from May to Nov.
- Rice producing states-Andhra Pradesh, Telangana, Punjab, Haryana, Chhattisgarh, Odisha, Madhya Pradesh, Tamil Nadu, Maharashtra, Uttar Pradesh, and Bihar are among the rice-producing states in India.
CAUSES OF LESS PRODUCTION
- Between June 1 and Sep 14 illustrate that Uttar Pradesh, Jharkhand , Punjab, and Bihar have experienced deficient rainfall
- Although West Bengal, the country’s largest producer, has overall experienced normal rainfall, its major production areas such as Nadia, Burdwan, and Birbhum have had deficient rainfall. This indicates potentially lower production this year.
- The EBP endeavors to blend ethanol with vehicular fuels as a means to combat the use of fossil fuels and in turn, rising pollution
- As per the government, sugar-based feedstocks alone would not be able to meet its stipulated target of 20% ethanol blending by 2025.
- In the 2018-19 Ethanol Supply year (ESY) the government allowed the FCI to sell surplus rice to ethanol plants for fuel production. The idea was to have in place an insurance scheme and an emergency provision for distillers.
- However in the ongoing ESY, because of supply constraints, there has been an up stick in the procurement of rice from the FCI.
AFTER EFFECTS OF THE BAN
- Geopolitical tensions between Russia and Ukraine have unsettled global food supply chains.
- While trade is disrupted in the black sea region, the prices are surging because traders are betting it will be an alternative for wheat which is becoming prohibitively expensive.
- India accounted for 41 % of the total rice exports in the world in 2021, larger than the next four exporters (Thailand, Vietnam, Pakistan, and United States) combined.
- As for broken rice, the United States Department of Agriculture states that India accounted for more than half of the commodity's global exports in the first half of 2022.
- In descending order, China, Senegal, Vietnam, Djibouti, and Indonesia are the biggest importers of India's broken rice.