Global rice traders developed ‘give and take’ policy to curb India’s rice exports.
Buyers, sellers, and freight companies have developed a ‘give and take’ policy to circumvent India’s restrictions on rice exports, even as Thailand and Vietnam consider raising the cereal’s global price.
‘India’s restrictions on rice exports have caused significant market disruption. However, in my experience, sellers have decreased prices by $30 per tonne, buyers have upped offers by $20 per tonne, and freight companies have reduced rates by $250 per container,’ stated VR Vidya Sagar, Director, Bulk Logix.
Buyers who are ready
‘Rice is being moved within port premises.’ However, fresh consignments are not being accepted since the trade must adjust to the new scenario. The price of premium type rice has been reduced as a result of the curbs,’ said BV Krishna Rao, President of the Rice Exporters Association of India (TREA). ‘Buyers in Sri Lanka, Singapore, and Indonesia are willing to pay the export tax,’ trade researcher S Chandrasekaran said.
Also Read | India’s ban on broken rice export criticized by US, EU & Senegal at WTO.
From September 9, India restricted rice exports by prohibiting the shipment of broken rice and charging a 20% export duty on brown rice, paddy, and non-basmati white (raw) rice. The Centre, on the other hand, exempted parboiled (boiled) and Basmati rice from the restrictions.
Most likely, a floor price
Foodgrain stocks fell to their lowest level since 2017 at 49.28 million tonnes (mt), with 16.16 million tonnes of milled paddy (11.31 million tonnes of rice) on hand as of September 1. While rice stocks are lower than last year at 24.46 mt, wheat inventories are at a six-year low at 24.82 mt.
In the middle of this, Thailand Cooperatives Minister Chalermchai Sri-on will meet with Vietnam Agricultural and Rural Development Minister Le Minh Hoan on October 6 to discuss raising rice export prices. ‘Thailand and Vietnam have agreed to raise the price by 20%.’ They might even set a floor price for shipments. This might render Indian export restrictions null and unlawful, according to Chandrasekaran.
Examine most likely
South-East Asia is making this shift because they consider their rice to be superior to Indian rice. However, the Indian exporting community believes that export restrictions will be reconsidered soon, particularly after the kharif rice output situation is clear. ‘If the Indian paddy crop size is strong, India will review its tariff, which has a net duty effect of 26% because there are other charges in addition to the 20% basic customs duty,’ said Rajesh Paharia Jain, a Delhi-based exporter.
‘We also anticipate the Centre to review the export limitations and relax once the picture on demand and supply becomes clear,’ TREA’s Rao added.
Prices of Indian 5% broken white rice have risen by $27 to $365-69 since the prohibition, according to the Thai Rice Exporters Association. At the same time, the price of 5% broken Vietnam has risen by $10 to $403-407. Thailand’s prices have risen by $13 to $444, while Pakistan’s have risen by $35 to $413-17.
Flooding in Pakistan
Similarly, 25% broken white rice prices in India are up by $30 per tonne, while Thailand and Vietnam have increased costs by more than $10, and Pakistan by $35. While the prices of parboiled rice in India and Pakistan remain stable, Thailand has raised the price by $20.
‘Countries such as Vietnam and Thailand have raised their prices because of a lack of cargo. Pakistani prices have risen as a result of the crop damage caused by the floods last month,’ said Jain.
‘We’ve started getting inquiries from countries like Vietnam, and customers are willing to pay a higher price because of tax,’ said M Madan Prakash, President of the Agri Commodities Exporters Association (ACEA). Buyers, on the other hand, are taking their time to acclimate to the price increase, he said.
Shipments may be delayed
Because of increased production costs, Thailand and Vietnam are likely to establish an institutional system to stabilize rice prices, according to Chandrasekaran.
According to Bulk Logix’s Sagar, if the current pattern continues, India may resort to setting a floor price for rice exports.
While parboiled exports are expected to rise, white rice shipments may fall to 5-6 mt from 9-10 mt, according to Jain. ‘Overall, non-Basmati exports are expected to fall to roughly 10 mt,’ he predicted.
Non-basmati rice exports increased to 5.81 million tonnes (MT) during the April-July period of the current fiscal year, up from 5.28 million tonnes during the same period last year, according to the Agricultural and Processed Food Products Export Development Authority (APEDA). Shipment earnings increased to $2.08 billion from $1.91 billion.
Also Read | India bans export of broken rice citing concerns about domestic availability.
Last fiscal year, India exported a record 17.26 million tonnes of non-basmati rice, earning 45,649.74 crores, compared to 13.08 million tonnes earning 35,448.34 crores in 2020-21. India’s rice exports have been driven by record production in recent years.
India produced a record 130.29 million tonnes of rice in the previous crop year (July 2021-June 2022). Inadequate rains in key growing areas such as West Bengal, East Uttar Pradesh, Jharkhand, Odisha, and Chhattisgarh have hampered prospects this year.
However, according to the YES Bank Agri Economic Survey, Kharif rice production will be higher despite low rainfall in some key growing states.