Rice exports from India lose steam in the current quarter

Non-basmati rice exports from India have slowed during the current quarter, especially to the Far-East and South-East Asia, as the region sees new paddy arrivals. Besides, payment trouble with Vietnam buyers, high freight charges and currently market volatility are impacting shipments.

On the other hand, shipments to Africa, especially parboiled rice, are doing well, exporters say.

Container shortage

“Rice exports are not as big as during April-June. However, shipments to Africa are taking place in break-bulk vessels due to lack of containers,” said M Madan Prakash, Agri Commodities Exporters Association (ACEA) President.

A good volume of rice is being shipped to African countries from Mundra, Mumbai and other western ports, he said.

“Lack of containers is hampering rice exports. Besides, prices have also declined, forcing buyers to exercise caution,” said BV Krishna Rao, The Rice Exporters’ Association (TREA) President.

“Volume of rice exports to Africa has increased. Shipments of parboiled rice to Africa have really picked up,” said Vidya Sagar VR, Director, Bulk Logix.

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On Tuesday, the Agricultural and Processed Food Products Export Development Authority (APEDA) said rice exports during April-August this year had increased by 13.7 per cent to ₹28,269 crore. However, no details were available on the volume during the period.

April-July performance

APEDA data for April-July showed that non-basmati rice exports were up at 5.27 million tonnes (mt), valued at ₹14,091 crore, against 3.03 mt worth ₹8,982 crore in the year-ago period.

Exports during August-September have slowed as prices of even 100 per cent broken rice have increased, said Prakash. Broken rice was delivered at ₹17,000 a tonne in Chennai until August, but it currently costs ₹20,000-21,000.

One of the reasons prices of 100 per cent broken rice are increasing is its use as feed since corn prices surged sharply during June-July. At one point, corn prices topped wheat rates in the global market.

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Countries such as Vietnam and China have been buying 100 per cent broken rice for feed, said Prakash. African countries, too, are buying 100 per cent broken rice for human consumption, said Sagar.

Africa’s preference

“African countries are buying both five per cent white and parboiled rice varieties,” said the Bulk Logix’s director.

Currently, five per cent parboiled rice is offered at $355 a tonne free-on-board, while five per cent white rice is quoted at $380, he said.

“African countries have been buying Indian rice for a long time. Even if Vietnamese rice is offered at a lower price, they still prefer our rice for its hardness,” said Rao.

According to the International Grains Council (IGC), Vietnam five per cent broken is quoted at $415 and Thailand’s at $379. As per IGC data, prices of Indian rice are up five per cent year-on-year, while they are down 20 per cent in the case of Thailand and 10 per cent for Vietnam.

“Surge in freight rates has also slowed exports. Earlier, container charges made up 10-15 per cent of the total cost of rice export. Now, it is 30-35 per cent,” said the TREA President.

ASEAN angle

During April-July, China was the second-highest importer of Indian rice, buying 4.76 lakh tonnes (lt). The whole of last fiscal, Beijing imported 3.3 lt of rice. Similarly, Vietnam, the fourth-largest importer of Indian rice, bought 3.84 lt. For the whole of last fiscal, Hanoi imported 2.93 lt, APEDA data showed.

South-East Asian and Far-Eastern countries have begun buying Indian rice only recently and were not important markets for India. The Association of South-East Asian Nations (ASEAN) has a treaty that favours members.

“ASEAN members give preference to member countries for imports. The new paddy crop has arrived in countries such as Thailand and Vietnam,” said Rao.

Thai comeback

Covid lockdowns in South-East Asia have also affected Indian rice exports, while Thailand has begun making a comeback in the global rice market.

“Thailand has won orders to export 4.5 lt rice to Iraq. Ban on trading with Iraq is off, so that market is open,” Bulk Logix’s Sagar said. It is after seven years that Iraq is buying Thai rice, though India is still better placed to grab the new opportunity.

“Even Malaysia is buying Thai rice, where the new crop has arrived. Probably, it will look at Indian rice in December,” said ACEA’s Prakash, whose Rajathi Group exports agricultural commodities.

“We can expect these countries to return to buy Indian rice from November itself,” said the TREA President.

Bangladesh, which purchased 7.6 lt of rice during April-July, compared with 9.1 lt the whole of last fiscal, would purchase another one lt, while Sri Lanka could open a tender to import at least one lt of rice, Rao said.

Vietnam woes

Indian exporters might be reluctant to ship more to Vietnam in view of pending payments. “The pending payment increases the interest burden for exporters. This ultimately cuts into the thin margin shippers get,” said Prakash.

“No one is sending any rice consignment to Vietnam. Some exporters had to offer heavy discounts to settle the payment problems,” said Sagar.

“Vietnam market is not on our map. Some importers have defaulted on payments, hurting exporters badly,” Rao said.

Prakash said an exporter who sent 30,000 tonnes of rice has been forced to store the consignment in a bonded warehouse after the buyer tried to strike a hard bargain. “The shipper thought fit to keep it in the warehouse and wait for the opportune time to sell,” he said.

Other issues

A Delhi-based trade analyst said payment problems in Vietnam have caught exporters on the wrong foot. “There could be similar problems in Lanka, where the foreign exchange crisis has forced the government to curb imports,” the analyst, who did not wish to be identified, said.

High freight and volatile exchange rates are also impacting rice exports, he said.

India’s rice exports have been helped by the ample stocks with the Food Corporation of India (FCI) and record crop over the last two seasons.

As per current norms, FCI should have 8.25 lt of rice as operational stock and two lt as strategic reserves as on October 1. Currently, it has 26.83 mt of rice and 17.6 mt of paddy (11.7 mt rice).

According to the Ministry of Agriculture, rice production last season (July 2020 to June 2021) was a record 122.27 mt against 118.87 mt the previous season. During the current season, kharif rice production has been estimated 2.5 per cent higher than 107.04 mt last year.