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2-min read

India Rice Exports May Hit Seven-year Low on Weak demand, Higher Prices: Report

The country exports non-basmati rice to mainly Bangladesh, Nepal, Benin and Senegal, and premier basmati rice to Iran, Saudi Arabia and Iraq.

Reuters

Updated:July 26, 2019, 2:07 PM IST
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India Rice Exports May Hit Seven-year Low on Weak demand, Higher Prices: Report
Balurghat: Farmers plant rice saplings in a paddy field during monsoon season at a village near Balurghat, in South Dinajpur district of West Bengal, Saturday, July 13, 2019. (PTI Photo) (PTI7_13_2019_000083B)
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India's rice exports are likely to fall to their lowest level in seven years, industry officials say, as weak demand from African countries weighs and shippers absorb the absence of government incentives that supported previous sales.

Lower shipments from India will help rivals such as Vietnam and Myanmar in raising their exports, according to Indian exporters, but could also force Prime Minister Narendra Modi's government to increase buying from farmers, even as it struggles to liquidate last year's stocks.

"Inventories have been piled up in Africa," said Nitin Gupta, vice president for Olam India's rice business. "A lot of Indian demand has been diverted to Myanmar and China as Indian prices are out of parity."

The south Asian country could export 10 to 11 million tonnes of rice in the fiscal year 2019/20 that started on April 1, Gupta said.

India exported 11.95 million tonnes of rice in 2018/19 through March 31, down 7.2% from the previous 12 months, even though the country provided incentives for exports of non-basmati rice for four months.

The country exports non-basmati rice to mainly Bangladesh, Nepal, Benin and Senegal, and premier basmati rice to Iran, Saudi Arabia and Iraq. In basmati rice exports, India competes with Pakistan, while in non-basmati rice exports rivals are Thailand, Vietnam and Myanmar.

The government incentives for exports were temporary and discontinued on March 25, said B V Krishna Rao, president of the Rice Exporters Association (REA). "The incentive needs to be restored quickly," he said, "otherwise there could be huge drop in the exports this year."

India's rice exports in April-May fell 30% from a year ago to 1.58 million tonnes as shipments of non-basmati rice fell more than 50% to 711,837 tonnes, according to data compiled by Agricultural and Processed Food Products Export Development Authority.

Shipments of white rice from India have nearly stopped altogether as Vietnam and Myanmar are offering more than $30 per tonne discount over Indian prices, said Gupta.

In parboiled rice, India has been trying to compete with Thailand but couldn't reduce export prices due to higher paddy, or unhusked rice, prices, said Himanshu Agarwal, executive director at Satyam Balajee, India's biggest rice exporter.

Paddy buying by central and state governments have lifted prices in the open market, making it difficult for exporters to compete profitably in the world market, said Agarwal.

The central state of Chhattisgarh, a leading rice producer, raised the minimum paddy buying price to 2,500 rupees ($36.20) per 100 kg in 2018, from 1,750 rupees - a 43% jump.

Indian exporters said the aggressive liquidation of old stocks by China, the world's biggest rice producer, has also hit Indian exports.

"China is exporting a huge amount of old rice to African markets. Africa being a major client, volumes have significantly dropped from India," said Agarwal.

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| Edited by: Ahona Sengupta
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