Page last updated at 18:20 GMT, Friday, 28 March 2008

India rice export prices up again

By Ethirajan Anbarasan
BBC News

Harvesting rice
Traders say rice prices rose by 10% last year

India has raised the minimum price at which it exports non-basmati rice in a renewed effort to discourage exports and control domestic food costs.

This is the second time in a month that India has raised its minimum price for exporting rice.

The price has gone up from $650 to $1,000 per tonne for non-basmati rice.

India is the second-largest rice producer in the world. It usually exports more than four million tonnes of rice a year.

The government imposed a total ban on non-basmati rice exports last October but lifted it following protests from exporters.

Sales affected

Traders were hoping to increase their exports by more than 30% this year - mainly to meet increased demands from east Asia and the Middle East.

Rice being loaded onto a Bangladeshi boat
Bangladesh is having to import rice (Photo: Daily Star)

But the latest government measures mean they may not achieve their targets.

"The price hike by the Indian government will affect our sales in the Middle East," Sheikh Dawood, a rice trader in Dubai, told the BBC Tamil service.

"We can't afford that price in the long run. If this trend continues, many South Asian immigrants in the region will be affected."

The government announcement coincides with reports that India's inflation is rising to a 13-month high.

Indian traders say rice prices went up by about 10% last year because of shortages in the domestic market.

In an attempt to bolster its stocks, India last week abolished import duties on rice as well.

International problem

India ended its reliance on food imports in the 1970s, largely to the government's so-called Green Revolution.

But two years ago, it imported wheat for the first time in six years following a significant drop in its stockpiles.

The government wants to avoid a similar situation for its rice stocks.

The problem is an international one, as global rice stocks have reached a 25-year low.

India's neighbour Bangladesh desperately needs rice imports after last year's cyclone wiped out nearly all of its rice harvest.

The head of the International Rice Research Institute, Robert Zeigler, recently warned that countries like Bangladesh face a real threat of social unrest because of shortages of rice.

India wants to avoid a similar situation and is taking precautionary measures to bolster its domestic stocks in the coming months.

But experts warn that these measures are temporary and that fast growing economies like India need to look beyond the current crisis.

They say the government should first stop converting farm land for industrial and housing purposes and invest more in irrigation and agricultural research.

The experts say growth in the farm sector is vital as more than 60% of the people in the region are still dependent on agriculture.

South Asia hit by food shortages
09 Jan 08 |  South Asia
Counting the cost of wheat price hike
21 Sep 07 |  Special Reports

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