India, the world’s largest exporter of rice, has ordered an immediate halt to its largest rice export category, in a move that is expected to cut shipments by roughly half, raising alarms over global food markets and potential inflation.

The government’s decision came as retail rice prices surged by 3% in just a month. With India accounting for over 40% of world rice exports, any reduction in shipments could further inflate food prices, which have already been influenced by Russia’s invasion of Ukraine last year and unpredictable weather patterns.

In response to the situation, the food ministry stated that a ban on non-basmati white rice exports was necessary “to ensure adequate availability of non-basmati white rice in the Indian market and to allay the rise in prices in the domestic market.” Retail prices showed an 11.5% increase over the span of 12 months, prompting the government to take action.

The impacted export category, non-basmati white and broken rice, accounted for approximately 10 million tons of the total 22 million tons of Indian rice exports in the previous year.

Simultaneously, the wheat market faces volatility due to tensions between Ukraine and Russia regarding grain trade in the Black Sea. Both countries have warned that ships heading to each other’s ports could be considered military targets. Russia’s termination of the grain deal with Ukraine has disrupted a crucial exit route for agricultural commodities. During the harvest season, Ukraine’s agriculture infrastructure has come under attack, leading to capacity constraints in exports. In response, efforts are being made to find alternative routes for Ukrainian crops, with neighboring countries possibly assisting in transit shipments.