RTL A Big Blunder! Price Of Rice To Soar As India Bans Exports

Prices of rice in the market are expected to increase following the decision of India, the world’s largest rice exporter, to ban the sale of white rice as it projects production shortfall this year.
“India has prohibited the export of non-basmati white rice with immediate effect, according to a government notice on Thursday, after a late start to seasonal monsoon rains hurt the crop and raised fears of a production shortfall,” according to a report by Reuters released July 20.
In explaining the effect of India’s rice export ban to the world supply, Reuters Correspondent Rajendra Jadhav wrote: “India accounts for more than 40% of world rice exports, which amounted to 55.4 million metric tons in 2022. India’s rice shipments reached a record 22.2 million tons in 2022, more than the combined shipments of the world’s next four biggest exporters of the grain – Thailand, Vietnam, Pakistan and the United States.”
This means that Rice Importing Countries like the Philippines will have to outbid each other to be able to buy the remaining World Rice Supply from countries like Thailand, Vietnam, Pakistan and the United States.
Following the passage of the Rice Tariffication Law (RTL) in 2019, the Philippines had become Import Dependent with rice imports hitting “3.7 million metric tons last year, making it the world’s second-largest importer of the staple,” roughly the same volume in 2023.
The RTL pushed by the Economic Managers of the previous administration led by Finance Secretary Carlos Dominguez promised to bring down the price of rice by P7 per kilo by allowing “unimpeded” entry of imported rice.
The Department of Agriculture which I headed at the time and local rice farmers warned that dependence on rice importation could threaten the country’s food security because Climate Change and Geo-Political Developments could affect world rice supply.
The flooding of imported rice in the local market was also feared to dampen the production intention of local rice farmers and result in a reduction of local prouction.
Dominguez and the Economic Managers, however, misled President Rodrigo Duterte and prevailed in having the law passed, even boasting that the RTL was the most important legislative reforms in the country’s Food Security.
With 40% of the rice supply in the world market unavailable this year, the Philippines will have to plant rice in an estimated area of 500,000, a task made difficult by the impending long drought caused by El Niño.
While this development would benefit Filipino rice farmers who opted to continue planting rice in spite of the flood of imported rice as this would increase the buying price of paddy rice, this will definitely hurt consumers.
This is happening because the Economic Managers of the previous administration were so obsessed with reducing Quarterly Inflation Numbers, at that time hovering a little over 2%, and came up with the idea of flooding the local market with rice to bring down food inflation.
The greatest irony now is the fact that the RTL which was designed to bring down Rice Inflation has proven to be a big legislative blunder as it will now cause massive Food Inflation.
#GovernanceIsCommonSense!