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India, one of the world’s largest rice producers, has long imposed strict regulations on the production and procurement of rice. These regulations extend even to byproducts such as broken rice, which, despite being considered lower-grade, plays a crucial role in various industries. In September 2022, the Government of India imposed an export ban on broken rice to ensure domestic availability. However, on March 7, 2025, this ban was lifted, allowing unrestricted exports once again. The move has sparked a debate over its potential benefits and downsides.

While a section of the stakeholders has welcomed the decision, there are some sectors that are seeing red.  

Why Was Broken Rice Export Banned In 2022? 

Broken rice is used as poultry and cattle feed. Broken rice also serves as feedstock for grain-based distilleries, which produce ethanol. This ethanol is then supplied to Oil Marketing Companies (OMCs) to meet around 20% of the blending requirements.

The ban came at a time when the Russia-Ukraine war had disrupted supply chains. 

According to a government statement, rice export was banned in 2022 "to ensure its adequate availability". The export policy of broken rice was changed from "free" to "prohibited".

The government had said the ban was put in place as there was a steady rise in the export of broken rice in the preceding months, "which had put pressure on the domestic market". It did, however, mention that the ban was only temporary.

Why Govt Lifted The Ban On Broken Rice

Earlier this month, the Centre scrapped the ban on broken rice and changed the policy back to "free" from "prohibited". The ban was lifted after the government recorded a surplus stock of broken rice at state-run godowns. Due to the rise in inventories, exporters had been urging the government to allow export again.

Rice Millers And Exporters Are Now Happy, But...

Rice millers and exporters had for some time been demanding this change, and the lifting of the ban has understandably come as a relief for them. According to figures available in the public domain, the Food Corporation of India (FCI) and related agencies currently hold 36.9 million tonne (MT) of rice stocks.

Inventories reportedly reached record highs in February, with rice stocks standing at nine times the government’s target. Broken rice, which accounts for up to 30% of the total rice milling process, had been selling at lower rates in the domestic market compared to global prices. The lifting of the ban could now spur higher domestic prices.

With exports now free, millers and exporters can expect higher revenues as global demand remains strong.

Trade and finance news website Financial Express quoted president of Rice Exporters’ Association BV Krishna Rao as saying that the rollback of the ban means that Indian exporters would be able to expand their markets. "We will be able to restore our export competitiveness in 100% broken rice exports over the next couple of months," he said.

Despite the ban, India allowed the export of broken rice to friendly nations and countries in need like Gambia, Benin, Senegal and Indonesia. The government's latest move would now allow Indian firms to expand markets in these nations and beyond.

Impact On Domestic Market

While millers and exporters stand to gain, there is anticipation that the decision may impact domestic rice prices. In 2022, when the export ban was imposed, the domestic prices of broken rice surged from Rs 16/kg to Rs 22/kg.

Before the recent decision to lift the ban, mandi prices were hovering around Rs 10-15 per kg, while global prices stood at approximately Rs 34/kg, comparable to the price of regular rice in our mandis. With exports resuming, sources said, a price rise in the domestic market is anticipated.

Rice trade expert E Rajiv Kumar, however, feels otherwise. “The impact in the coming days would be a reduction in international rice prices. (But) Since the stock is in abundance, prices in India will remain subdued,” he told The New Indian Express.

Will There Be A Setback For The Poultry Sector And Ethanol Production?

The ethanol industry is one sector that could face challenges. When the Centre imposed the ban on the export of broken rice in September 2022, it was stated that the decision would sustain production of ethanol, helping with the successful implementation of the Narendra Modi government’s Ethanol Blending Programme (EBP), which aims to reduce dependency on crude oil, relying heavily on grain-based ethanol. With maize production falling short of requirements, broken rice has been a crucial alternative.

Now, if broken rice prices soar due to exports, ethanol producers may struggle with supply shortages. Abhinav Singal, managing director of AVJ Agrico Private Limited, told ABP Live that the lifting of the ban will disturb the market for broken rice procurement and increase the prices.

"This move of the government will again impact the Grain availability and prices, thereby affecting the ethanol production in the country and hence, delay the government goals of transitioning from fossil fuel to greener fuels. This will also impact the Forex savings of the government by reducing the crude oil imports," Singal said.

He pointed out that grain ethanol manufacturing is contributing to a large extent to the success of the Ethanol Blended Petrol (EBP) Programme of the Centre. "Due to the release of surplus FCI rice to meet the balance grain requirement of the Ethanol industry, the grain inflation had reduced and it stabilised the grain market," he said.

"For this success to continue, the grain Ethanol manufacturers need proper feedstock year round The 60% of the grain requirement is met through Maize, 20% is met through broken rice and the balance remaining 20% is made through surplus rice which the government has made available by releasing surplus FCI rice lying in godown," he added.

Another sector that has concerns surrounding the export resumption is the poultry industry. Broken rice constitutes around 60-65% of poultry feed input costs. 

In 2022, the government had said India produced about 50-60 LMT of broken rice annually, and that was mainly used as feed for poultry and other animals. Sudhanshu Pandey, then secretary, Department of Food & Public Distribution (DFPD) in the Ministry of Consumer Affairs and Food & Public Distribution, had specifically said the export policy of broken rice was amended to "ensure adequate availability of broken rice for consumption by domestic poultry industry and for other animal feedstock", besides for ethanol production.

The government had also said farmers in the poultry and animal husbandry sectors were impacted when the price of broken rice had gone up to Rs 22/kg,  which in turn was reflecting in the price of poultry products such as milk, egg, and meat.

If domestic prices now rise again due to the increased exports, the poultry industry fears that farmers will face higher feed costs, leading to a potential increase in the prices of poultry products. This also has the potential to contribute to overall food inflation, affecting consumers directly. 

Source : msn