DENVER, COLORADO, US — India’s ban on exports of non-basmati white rice is driving up prices in other Asian exporting countries but could in the long term lead to large stockpiles and price over-correction, according to a new research brief from CoBank’s Knowledge Exchange.

The Indian government on July 20 banned the export of non-basmati white rice to “allay the rise in prices in the domestic market” stemming from threats related to Black Sea geopolitics, El Niño and extreme climatic conditions in other rice-producing countries, according to the brief by Tanner Ehmke, lead grains and oilseeds economist for CoBank.

The ban impacts 7 million to 8 million tonnes of Indian rice exports, or 15% of global rice trade.

Because of the ban, prices in other top exporting Asian countries such as Thailand, Vietnam and Pakistan have skyrocketed. Prices of white 5% broken rice in Thailand, the second-largest rice exporter, have climbed 18% since the Indian export ban.

“The sharp rise in Asian rice prices has raised concerns of other important exporters following with similar restrictions or bans on rice exports, which would cause extreme volatility in world rice prices,” Ehmke said in the brief.

Higher global prices will increase rice production in other countries. Indian rice farmers are insulated from falling rice prices by the government so rice production will not likely be impacted by the export ban.

Eventually, the growing stockpiles of rice in India will ultimately be dumped on the world market, causing world rice prices to over-correct, Ehmke said.

“A prolonged period of abnormally depressed rice prices and lower incomes among rice farmers, including in the US, will likely follow the reversal of India’s rice export ban,” Ehmke said. “With heightened rice price volatility in the offing, rice producers and merchandisers should review their liquidity situation in the event of much higher rice prices and hedging needs.”

In the short term, US rice producers and exporters stand to benefit from India’s ban, as global demand for US rice is expected to rise, Ehmke said. Increased demand will temporarily lift prices for US producers.

“The good news is that the ban will benefit US rice producers with stronger export demand, particularly from Iraq and possibly the Caribbean, as well as Central and South America,” Ehmke said.