Rice exports from India will be affected this year

But the high residue level in Basmati rice remains a major challenge for exports and Basmati rice exports to the European Union (EU) have fallen from 4 lakh tonnes in 2017-18 to 1.7 lakh tonnes.

High sea freight rates, non-availability of containers and fall in rice prices by Vietnam, Thailand and Pakistan are likely to impact rice exports from India in the 2021-22 season. Though exporters have signed futures contracts worth 1-1.2 million tonnes (MT) monthly till November 2021, overall exports are likely to fall by around 12 MT, industry experts said. India achieved the highest ever export of 17.72 metric tonnes of rice valued at $8.89 billion in FY21.

Rice Exporters Association President BV Krishna Rao said that apart from increasing logistical constraints at ports, high freight cost is posing a major challenge for exporters. “In the last two to three months, no container has been able to move due to rain and today at least 15 ships are waiting at Kakinada port,” he explained.

“In a letter, we have approached the Ministry of Railways to look for additional railway sidings to coincide with the opening of the deep water port. The capacity has doubled from 7 to 15 vessels and hence, more sidings are required to meet the growing requirements,” the association said.

Indian non-basmati rice trade depends on Indian Rail For interstate logistics as Kakinada port is the main shipment port for non-basmati rice received from Chhattisgarh, Maharashtra and Orissa regions, which caters to the shipment. Besides, Vietnam, which turned out to be a major buyer last year, has stopped buying rice from India from May. Rao said the Vietnamese importers are demanding exemption for the release of the cargo.

“Thailand, Vietnam and Pakistan have also slashed prices. Last year he held high positions. Thailand’s 5% broken rice costs $380 a ton. Whereas Vietnam’s 5% broken rice costs $390 per ton. Last year, prices in these countries were at least $100 per tonne higher than the current rates,” Rao said.

Indian prices are currently around $350 per tonne to $370 per tonne. Rao said that China is also importing rice on a large scale and it is likely to import around one million tonnes of rice this season. Bangladesh, Nepal, West Africa and East Africa are other major buyers of Indian rice.

Vinod Kaul, Executive Director, All India Rice Exporters Association (AIREA) said that high freight cost and availability of containers are creating major problems for the exporters. “Basmati rice exports are down 17% in the first three months of FY22. The export of non-basmati rice has also seen a decline in this period. If the situation does not improve, the export of basmati rice will be 25% less as compared to FY21,” he said.

He said that the total rice export is likely to come down to 12 MT in FY22. Basmati rice exports have been badly hit as 80% of the trade is done through containers unlike non-basmati rice, which is shipped through bulk break ships, he explained. However, Bangladesh has reduced the import duty from 25% to 15% and this is likely to compensate the loss to exporters in other countries, he said. But the high residue level in Basmati rice remains a major challenge for exports and Basmati rice exports to the European Union (EU) have fallen from 4 lakh tonnes in 2017-18 to 1.7 lakh tonnes.