India, the world’s largest rice exporter, is considering an export ban on most rice varieties. The move could further push up the global price of rice, which is already at high levels due to the El Niño weather phenomenon that caused drought and has brought heat back.

According to Bloomberg sources, the Indian government is discussing a plan to ban the export of all non-Basmati rice (rice that is not a Basmati variety commonly grown in India). The reason for this is that the price of rice has risen in this country and the authorities want to avoid the risk of a further rise in inflation.

If such an export ban is implemented, it could affect around 80% of India’s rice exports, which in turn could help bring down rice prices in the country but push world prices even higher. Rice is a staple for about half of the world’s population, with Asia consuming about 90% of the world’s rice supply.

Rice prices in Asia are currently at their highest in more than two years as importers ramp up buying and hoarding amid fears that El Niño could result in a drop in crop production. Meanwhile, global rice prices, currently at an 11-year high, are expected to continue rising amid the El Niño phenomenon that is threatening harvests in the world’s largest rice-growing countries.

India currently accounts for about 40% of the world rice trade and has recently restricted exports of some rice varieties. Last year, the South Asian country banned the export of broken rice and then imposed a 20 percent tax on white and brown rice exports after the war in Ukraine pushed up the prices of staples like wheat and corn. The country also restricts the export of wheat and sugar.

India currently supplies rice to more than 100 countries, with Benin, China, Senegal, Ivory Coast and Togo being the largest buyers.

Rice company shares in India fell sharply after it was revealed the government is considering an export ban. The share price of the country’s largest rice company, KRBL Ltd., fell as much as 3.7% before recovering slightly in trading on July 13. And stocks of Chaman Lal Setia Exports Ltd. down 1.4%, Kohinoor Foods Ltd. and LT Foods Ltd. decreased by 2.9% and 4.4% respectively.

Since the beginning of this year, rice-importing countries such as Indonesia, China and the Philippines have been stockpiling rice. According to the World Meteorological Organization, the El Niño phenomenon has returned to tropical Asia-Pacific for the first time in seven years and threatens to trigger drought in many rice-growing regions. The fact that India could ban rice exports further increases concerns about the rice supply in the near future.

India’s plan comes after the country’s inflation picked up in June, largely on the back of rising food prices. Bloomberg Economics predicts that inflation will continue to rise in the country due to the recent rise in the price of tomatoes – a key ingredient in Indian cuisine. Both Barclays Bank and Yes Bank have also raised their inflation forecasts for the South Asian country.

Retail rice prices in Delhi are up about 15% this year, while the national average price is up 8%. Persistently high food prices could weigh on sentiment in the country ahead of a national election later this year and a general election in 2024.