Nor would an export ban lower inflation at home or meaningfully improve India’s food security. In August, the government had 28 million tonnes of rice in its warehouses (well above its mandated buffer stock of 11 tonnes), so we’re not running out any time soon.
Meanwhile, the agricultural economists Ashok Gulati and Ritika Juneja have pointed out that inflation in India is mainly being driven by the prices of fuel and vegetables; rice prices accounted for than 2 per cent of the rise in the consumer price index last month.
Moreover, export bans are not just bad for other poor countries; they’re bad for India’s own farmers, who are missing out on high prices overseas. While officials from New Delhi have often torpedoed consensus at global summits in the name of defending India’s millions of marginal farmers, their actions when it comes to agricultural trade policy show that they’re more concerned about urban food prices, not farm profits.
Farmers in India are accustomed to a one-sided bet: They are exposed to the downside when global prices crater and don’t benefit when they rise, if the government blocks exports.
FULL-SCALE RICE BAN WOULD CAUSE CHAOS
Some of the sustained criticism India received after the wheat export ban seemed designed to prevent a repeat of that mistake with rice. If so, it may have had some effect. The government seems to be focusing for now on limiting exports of “100 per cent broken” rice, a low-quality grade often used for animal feed and exported especially to China.
In that case, the main impact would be on margins for Chinese pig farmers. This isn’t a negligible concern: Low margins have already pushed many of them out of the business, causing China’s pig herd to shrink. That’s sent pork prices up by more than 20 per cent, driving overall consumer inflation in China to a two-year high.