Yahoo Finance India's rice export ban leads to stockpiling in Canada and around the world
India's decision to ban the export of non-basmati rice has led to consumers panic-buying and stockpiling Indian rice around the world, driving up prices in the process.
In Canada, the U.S. and abroad, reports of panic-buying are flourishing on social media, with stores that cater to South Asian communities implementing caps on the amount that any customer can buy, and adjusting prices.
Sriram Ramamurthy, the manager of Iqbal Halal Foods in Toronto, told CBC News in an interview Monday that he saw an immediate increase in demand for rice once word of the ban spread on Thursday of last week.
"They started coming in here and they they wanted to buy more and more," he said. He soon implemented a limit of one bag per customer, but that quickly proved futile as customers would come back with more family members, "each one trying to pick two or three at a time."
Some customers would even approach other customers in line who were not buying rice, trying to get them to purchase it on their behalf, he said.
Ramamurthy says he carries more than 40 different brands of rice in his store, mostly from India, but the majority of what he sells is basmati rice, a premium grade of rice that isn't even included in the export ban.
But that hasn't stopped customers from trying to buy up every grain they can, of basmati and varieties included in the ban, just in case, he said.
Siraj Mohammed said he heard about the ban, so decided to come "down to the grocery store expecting that this is not gonna be the case in Canada. But I guess the worst happened," he said. He prefers one specific type of basmati rice, one that the store doesn't have any more of right now. "Now I'm not going to be able to get my hands on it, I guess."
Sriram Ramamurthy, Manager of Iqbal Halal Foods in Toronto, says customers have been stockpiling rice after India moved to ban some exports. (Nisha Patel/CBC)
Ramamurthy says he hasn't raised his prices yet, but he's expecting his suppliers to soon. Stores that cater to the South Asian market elsewhere in Canada are reporting similar scenes, including Savor Supermarket in Saskatoon, where purchases are being limited.
Stores in the U.S., Australia and elsewhere are also seeing unprecedented demand, Bloomberg and others reported Tuesday, although CBC News has not been able to independently verify the authenticity of videos showing hoarding and panic buying.
Prices up sharply
India has taken the extraordinary step in order to ensure domestic supply, and bring down prices, which have skyrocketed in recent months. According to government data, the domestic price of non-basmati rice has increased by almost 10 per cent this month. In September of last year, a metric tonne of non-basmati rice in India would cost about $330 US. Today it tops $450, according to trading in agricultural futures contracts, which track prices.
Sophia Murphy, executive director for the Minneapolis-based Institute for Agriculture and Trade Policy, says rice is such a staple for India and its 1.2 billion people that the government manages supply closely. Unlike other food commodities, she says the global rice market is very domestically oriented, as less than 10 per cent of all the rice in the world ever crosses a border.
While India is far and away the world's largest exporter of rice, with more than 40 per cent of international trade in it, their primary concern is maintaining domestic supply, which is why they have had export bans in the past, she says.
"If they ban or someway limit the exports, it should keep more production in the country and it should reduce the inflation pressure that is there on food prices," she said.
Canada imported about $650 million worth of rice last year, according to government data. Within that, about $140 million came from India.
Murphy says while supply of basmati may also be strained, the government did not move to ban exports since it is a more premium product. Local concern is on the other staple varieties, which is why the government used the dramatic step of halting exports.
"Bans are easy to explain to the public," she said, "we're not selling food abroad, we're looking after people at home. It's often a pretty blunt — not necessarily very effective — instrument but it has domestic political capital associated with it."
India's move to ensure domestic supply is the second major announcement from a major exporter this year, as in May Vietnam announced plans to limit its own exports to four million tonnes a year by 2030. That's down from more than seven million tonnes a year right now, and it's aimed at "ensuring domestic food security, protecting the environment and adapting to climate change," the government said in a release.
