India, the leading global exporter of rice, is anticipated to extend its restrictions on international sales throughout the upcoming year. This decision is likely to keep the essential grain near its peak price levels, reminiscent of those seen during the food crisis of 2008.

Lower prices, coupled with ample stockpiles, have positioned India as one of the top global shippers over the past decade. Recent statistics reveal that India now accounts for almost 40% of the total global shipments, with prominent buyers including African nations like Benin and Senegal.

However, Prime Minister Narendra Modi, who is set to seek reelection next year, has consistently increased constraints on shipments as part of an effort to control domestic price surges and safeguard Indian consumers.

“As long as domestic rice prices face upward pressure, the restrictions are likely to stay,” said Sonal Varma, chief economist for India and Asia ex-Japan at Nomura Holdings Inc. “Even after the elections, if domestic rice prices do not stabilize, these measures are likely to get extended.”

India has implemented export duties and set minimum prices, restricting the export of broken and non-basmati white rice varieties. This led to a significant price surge, reaching a 15-year high in August. Buyers from the most vulnerable importing nations refrained from making purchases, and some even sought waivers. As of October, rice prices remained 24% higher compared to the previous year, as reported by the UN’s Food and Agriculture Organization.

According to B.V. Krishna Rao, the president of the Rice Exporters Association, representing India’s shippers, Modi’s government aims to secure ample domestic supplies and mitigate price hikes. Rao suggested that the government is likely to maintain the current export restrictions until the upcoming vote next year.

The onset of El Niño, a phenomenon known for adversely affecting crops across Asia, could exacerbate the tightening of the global rice market. This occurs at a juncture when world stockpiles are on track for a third consecutive annual decline. The Thai government has indicated that paddy output in the second-largest rice exporter is expected to decrease by 6% in 2023-24 due to dry weather conditions.

“Rice is tough because there are just not a lot of other suppliers,” said Joseph Glauber, a senior fellow at the International Food Policy Research Institute in Washington. India leaves “a big hole to fill,” he added.

Adding to the policymakers’ caution, concerns about India’s crop are further complicating the situation. Estimates from the farm ministry suggest that the monsoon-sown harvest may decrease by nearly 4% compared to the previous year due to irregular rainfall. The cumulative rainfall during the monsoon period from June to September was the lowest in five years.

A top priority for the government is guaranteeing the availability of supplies to support the country’s free food program, benefiting over 800 million people. Earlier this month, Modi declared the extension of the arrangement by five years, making this announcement just days before a series of five state elections.

The significance of the handouts increases as food costs continue to climb. Data compiled by the food ministry indicates that retail prices of rice in New Delhi have risen by 18% from a year earlier, while wheat is now 11% more expensive.

A representative from the food and trade ministries stated that the government is consistently monitoring food prices, and a well-considered decision on exports will be made at the appropriate time, taking into account the interests of both consumers and farmers.

While India’s policy may eventually favor financially strained consumers in the world’s most populous nation, the same cannot be said for vulnerable populations elsewhere in Africa and Asia. Billions in these regions depend on a bountiful global rice supply.

In the Philippines, rice inflation reached a 14-year peak in September, despite a presidential directive to limit costs. Meanwhile, in Indonesia, the government is increasing imports to alleviate prices ahead of the presidential election in 2024.

West Africans, particularly Nigerians, have felt the impact of escalating costs. In September, the price of rice, a key component for preparing jollof, a widely enjoyed dish in many Nigerian households, surged by 61%. During that month, annual food inflation accelerated to 30.6%, coinciding with headline inflation rising to 26.7%—the swiftest rate since August 2005.

The US rice industry, for its part, said India’s export ban was unnecessary. “India has more than sufficient stocks right now,” said Peter Bachmann, president and CEO of USA Rice. “While our exporters (and other major exporters in Asia) are benefiting in the short term, when India lifts the export ban in the coming months, they will once again significantly distort world prices.”