Nigeria, Ghana, Senegal: India’s export restrictions complicate rice supply

By Estelle Maussion
Posted on Thursday, 6 October 2022 10:27

A worker unloads bags of rice at a wholesale market in Chandigarh, northern India, July 29, 2014. ©Ajay Verma/REUTERS

New Delhi's rice export restrictions herald higher prices for many West African countries, including big rice importers Nigeria, Senegal and Ghana.

The import bill for rice in West Africa, already high for many countries, promises to soar even higher. In early September, India – the world’s largest exporter of this cereal since 2012, and a major supplier to the West African region – announced that it would limit its exports in favour of its domestic market.

The two measures taken – a ban on the export of broken rice and the introduction of a 20% tax on exports of other types of high-quality rice – are likely to complicate the supply for the majority of West African countries, which are still largely dependent on Indian rice despite their efforts to increase domestic production.

Dependence

Senegal, a major consumer of broken rice, is the country most affected by New Delhi’s decision: India provided 55% of Senegalese rice imports for the 2021-2022 season, far ahead of its other suppliers, Thailand (22%), Brazil (12%) and China (4%), according to Trade Data Monitor (TDM).

Senegalese imports represented one million tonnes over the last twelve months, a volume equivalent to that imported by China over the same period. In 2020, the bill amounted to $399 million, 40% of which was paid to India, making Dakar the world’s second largest importer of broken rice by value, according to data from the Observatory of Economic Complexity (OEC), a platform created by a Massachusetts Institute of Technology (MIT) laboratory.

But Senegal is not the only buyer under pressure. For most countries in the region, which rely on New Delhi to supply them with white rice (with breakage rates ranging from 5 to 25%), the Indian decision is bad news, heralding supply difficulties and higher prices.

Domestic production

Côte d’Ivoire, which produces around one million tonnes of rice per year, needs to import at least as much to satisfy its domestic consumption, estimated at 2.45 million tonnes in 2022-2023, according to the latest data published by the United States Department of Agriculture (USDA). However, since 2020, India has been its main supplier, having made available more than 550,000 tonnes of rice out of a total import volume of 1.3 million tonnes during the 2020-2021 season, and nearly 400,000 tonnes out of a similar import volume over the 2021-2022 period, according to the USDA.

By 2020, Abidjan had imported $551m worth of rice, including $213m from New Delhi, with India topping the top three growing export markets to Côte d’Ivoire between 2019 and 2020, alongside the US and Burkina Faso, according to the OEC.

Informal market

Spillover effects can also be expected in Nigeria. Despite booming domestic production, Nigeria continues to import more than 2 million tonnes of rice each year, mainly from Thailand and India, with grain entering the country mainly through informal channels from Benin and Burkina Faso, before being sold on traditional markets.

The same difficulties are to be expected in Benin and Guinea: India accounts for more than half the value of Benin’s rice imports (the world’s 7th largest importer) in 2020, according to the OEC, and nearly 80% of Guinea’s supply, according to USDA figures from April 2022.

In 2021, Benin imported more than 1.2 million tonnes of rice (non-basmati) from India, making it Africa’s largest importer of the Indian grain, ahead of Senegal, Côte d’Ivoire, Guinea (in 4th place with 726,000 tonnes) and Togo (in 5th place with 675,000 tonnes), according to data from India’s Ministry of Commerce and Industry.

Relaxation

“All the countries in the region buy from several countries, including India, and are able to place orders in other countries,” says Pierre Ricau, market analyst at Nitidæ. “The problem is that the move will drive up prices for other suppliers and, in turn, for the whole of Africa”.

For Patricio Méndez del Villar, a rice specialist at the The French Agricultural Research Centre for International Development (CIRAD), the difficulties must, however, be qualified. Several factors are contributing to an easing of the situation, starting with the fact that a number of countries have started to build up reserves since the beginning of the year, and have larger stocks than in normal times.

“Other points should also play a positive role: the strong pressure from Indian exporters to lift the restrictions, the fact that the announced measures do not concern parboiled rice, a product exported to Nigeria in particular, and finally the time of year that corresponds to the start of the harvest in Asia, which encourages the liquidation of existing stocks,” says the CIRAD specialist.

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