India’s Rice Export Ban: International Responsibility and the Climate Crisis
On the 20th of July 2023, the Government of India took a significant step to address its domestic food security concerns by imposing a prohibition on the export of non-Basmati white rice, including both semi and wholly-milled varieties. This assertive play comes amidst a pressing need to ensure an adequate food supply within the nation.
Source: Statista
A press release from the Ministry of Consumer Affairs states that it was implemented to “ensure adequate availability” and “allay the rise in prices in the domestic market.” The late arrival of monsoon rains forecasted a potential shortage. Since then, however, there have been heavy showers leading to extreme flooding in key rice-growing areas in North India, ultimately destroying crop output. This has translated to a 14-15% domestic price rise of rice in the month of March itself. Furthermore, its stock-to-use ratio (a standardised ratio that measures stocks and gives insight into food security) will drop to its lowest point in 5 years. Combined with the high price of tomatoes (increased 340% year-to-date), the harsh reality of food insecurity has started to set in. The export ban is supposedly a strategic endeavour to showcase the current Prime Minister, Mr Modi’s prioritisation of food security before the upcoming union elections in 2024. This move can be woven into the rise of resource nationalism, examined more closely by Danial Ahmed in a previous report, where he points towards the possible movement to soft commodities. In this context, Reuters has reported that contracts worth an estimated $1 billion could be at risk, indicating the certainty of this shift.
Source: The Hindu
With the already fragile global food market struggling through the repercussions of the ongoing crisis in Ukraine, analysts are concerned about the anticipated impact of this ban. India is the largest rice exporter globally, accounting for a staggering 40% of the rice trade with exports totalling 22.2 million tons. The country’s rice exports also surpass the combined total of the next four largest rice-exporting nations, which will not be able to meet the supply deficit from this ban, exacerbating the existing global food shortage crisis and putting additional pressure on food prices worldwide.
While the ongoing conflict in Ukraine disrupts agricultural production and exports, recently seen with Russia backing out of the UN brokered Black Seas grain deal, the sudden spike in basmati rice demand adds another layer of complexity to the global food insecurity puzzle. Furthermore, China, the largest rice producer in the world, but also the biggest grain importer, has had an abysmal monsoon with its soil moisture levels of the rice growing regions at a very low level, which will lead them to demand more rice for import due to a domestic shortage. This is due to the El Nino Phenomenon, which describes unusually warm waters in the Pacific Ocean impacting wind movement and therefore rainfall and will have more significant effects in the coming months. The amalgamation of geopolitical tensions and climate-induced agricultural crises poses a grave threat to food availability and affordability worldwide.
India’s rice ban also unequally targets the most vulnerable with top importers of Indian non-basmati rice including Benin, Bangladesh, Angola, Cameroon, Djibouti, Guinea, Ivory Coast, Kenya, and Nepal: all developing nations with poor historical food security trends. Considering historical evidence of India’s ban on wheat export and the wording of the notification, it might still continue to allow the sale of non-basmati rice to its neighbours. In this case, the market impact may be limited. However, considering the current government’s hardline posture, a hard ban with large implications for dependent countries is a possibility.
Source: The Hindu
That said, developed countries do not have it easy either; the large Indian diaspora (close to 18 million people) is allegedly panic buying Basmati rice as well, further deepening disparities in the global food shortage. In the United States especially, posts on Twitter(X) have shown large crowds and empty rice shelves, with some stores implementing a ‘Only 1 rice bag per family’ policy. This has exponentially increased Basmati rice prices in the US with a 9kg bag of rice selling at $27. The community fears a potential ban on Basmati Rice as well.
However, Asian Rice Exporting Nations have been able to profit from this supply deficit; Thailand and Vietnam have both experienced a 5% rise in price since the ban. The price of Vietnam’s rice has surpassed its highest level since 2011 and Thailand’s is at a 2-year high.
In conclusion, India's decision to impose a ban on the export of non-Basmati white rice marks a significant move with far-reaching implications. Driven by the urgency to secure its domestic food security needs, the government's action reflects its commitment to prioritising the well-being of its citizens amidst the challenges posed by climate-induced crises. It truly shows how in today’s world, all politics are climate politics
Ghanaian electricity: the triumph of competitive politics over good governance
On 26th May, Ghana’s government tried to propose a restructuring of the US$1.58 billion of debt owed to various private power producers. The producers have rejected this proposal and threatened to cut off the power supply, which could cause a third power crisis within the last decade. These power crises are part of a larger consistent failure to provide basic electricity to the citizens of Ghana; It exemplifies the failure of the International Monetary Fund’s (IMF) Structural Adjustment Programmes (SAP) and the Good Governance Agenda of the 1980s. This article will explore how commercialisation can fail in a culture of competitive politics.
Electricity has been a front-running issue in Ghanaian politics since its founding President Kwame Nkrumah’s belief that building the Akosombo Dam, the third biggest dam in the world in terms of water capacity, would bring developmental leaps. The succeeding presidents including President Jerry Rawlings, the first democratically elected President, used the extension of the electric grid to draw votes, making electricity a critical measure of political success and developing a norm that electricity provision is a core responsibility of the government. This has led leaders to intervene frequently in the privatised energy sector to increase electric grid sizes (making it one of the biggest in West Africa). The political structure also allows the president to have a say in the decisions of the supposedly ‘independent’ Public Utilities Regulatory Commission (PURC) since he has the power to appoint board members. Ghana adopted the IMF’s SAP in 1995 when its inflation rates were over 100%. Under the Standard Reform Model, Ghana allowed private management of their electrical facilities.
Fast forward to August 2012, the anchor of a pirate ship ruptured on the West African Pipeline, inflicting a GDP loss of US$320-924 million. This external element is only the tip of the iceberg. The underlying issue for such a large GDP loss (an estimated 4%) was that the remaining power generation capacity required crude oil, which was more expensive than pipeline gas. This led to high debts within the producing companies; the Volta River Authority (VRA) and the Electricity Company of Ghana (ECG). Furthermore, Government subsidies and financial support were insufficient for these companies to continue ordering fuel, despite multiple requests. For example, The VRA requested amelioration for six cargoes of light crude but was only provided with finance for three. As such, the government played a significant role in the elongation of the crisis. A central problem can be traced back to the inefficiency of Ghana’s large electricity grid. Incumbents often expanded the grid in hopes of demonstrating their continued dedication to providing electricity, but large parts of these grids are unmonitored and suffer from severe reliability issues. This can be traced back to show how competitive politics has compounded the severity of the crisis.. With the 2012 General Elections scheduled for December of the same year,, there was a further electorally motivated intervention to prevent tariff rises, increasing profit and allowing the companies to order more fuel. This resulted in the inability of the VRA to pay the fuel suppliers, thus further elongating the crisis.
Without sufficient investigation into the underlying issues of the price of fuel and the lack of capital to invest in them, the government signed 43 new contracts for primarily thermal power plants taking the total electricity capacity (assuming sufficient fuel is provided) from 1GW to 5GW.. The then President John Mahama did little due diligence and circumvented officials in the Energy Commission who had predicted energy demand of 3,000 to 4,000MW by 2020. The simplest way to mitigate this oversupply would be for Ghana to become an electricity exporter in the region; however, this did not materialise due to high tariffs, poor infrastructure, and neighbouring countries wanting to be self-reliant after previous experiences of shortage. This overabundance has driven government debt to US$1.4 billion, which is approximately 4% of GDP. Furthermore, these contracts were used to create thermal power plants instead of implementing the planned hydropower plants including Micro-Hydro Western Rivers Scheme and the Juale Dam. Focusing on increasing electricity capacity instead of the fundamental cash flow and reliability issues can be best explained as an electorally driven solution which demonstrates the incumbent’s continued dedication to providing electricity by investing in tangible infrastructure instead of actually solving the electricity crisis in the long run.
These two crises show the failure of the Standard Reform Model in a highly competitive political situation. The market mechanism, commercialisation and separation had no effect in a country where governments continue to intervene to meet short-term political objectives. Since tariff increases meant a loss of power, it was impossible for leaders to divert resources to achieve long-term stability and instead focus on unsustainable practices like low tariffs.
Today, Ghana is set to default on loans by the IMF and has been in talks with the G20 to restructure its external debts. While the IMF is imposing more stringent conditions on loans, its leaders have also been cosying up to the Chinese to help solve their debt crisis, leading to increasing tensions with the United States. If this gridlock continues, the Ghanaian people would either be buried in further debt or have to face another electricity shortage crisis.
Cover image: “Ghana Akosombo Dam” by Mark Morgan Trinidad A