Rice traders are looking at the Kakinada belt of Andhra Pradesh as the main sourcing point to ship out non-basmati grain, following the Empowered Group of Ministers' (EGoM) decision to allow up to 10 lakh tonnes (lt) of export.

According to trade sources, double-polished parboiled rice with five per cent broken content is available within 100 km of Kakinada port today at about Rs 17,000 a tonne.

Adding various expenses of around Rs 3,500 — towards packing, transportation, clearing and forwarding, bank and insurance charges, port labour, etc — would take the total cost to Rs 20,500 or $461 a tonne.

“Inclusive of $14-15 margin, five per cent broken parboiled rice from India is exportable at $475 a tonne, free on board,” the sources said.

That makes it competitive against five per cent parboiled Sortex rice from Thailand and Pakistan, currently being offered at $515-545 a tonne. Five per cent broken white rice is quoting lower, at $480-495 from Vietnam, $510 from Pakistan and $510-540 from Thailand.

Indian exporters may also be able to ship out white rice with 25 per cent brokens sourced from near Kakinada at Rs 16,000 a tonne.

This rice would be exportable at $450 a tonne, which is below $460-500 price of Thai and Pakistan origin and around the $425-455 range from Vietnam.

“Indian rice is quite competitive if you can source it from near the ports. There is no rice today being offered at less than $425 a tonne and even that would be for 100 per cent brokens from Vietnam,” the sources added.

Diversion, a concern

But the biggest worry for the Government — one reason why it has been hesitant to open up shipments — is the possibility of rice meant for the public distribution system (PDS) or the Food-for-Work programme being diverted for exports.

“If the rice, instead of being bought from the market at Rs 16,000-17,000, can be sourced from the PDS at Rs 10,000 or below, there is a huge killing to be made from exports at the current world prices,” the sources pointed out.

To prevent this, the EGoM has proposed fixing a minimum export price (MEP) of $400 a tonne for non-basmati rice other than the premium ‘Sona Masuri', ‘Ponni Samba' and ‘Matta' varieties. For the latter, the MEP has been pegged at $850 a tonne.

The proposed $400 MEP — which the EGoM has left to Commerce Ministry's discretion to notify — is expected to curb the ‘temptation' for traders to source PDS rice that can then be exported at super-competitive prices.

Besides the MEP, the EGoM has proposed allocation of a maximum quota of 12,500 tonnes for each exporter within the overall 10 lt to be allowed. The quota would be only against irrevocable, confirmed letters of credit, with the exporter also required to furnish bank guarantee for 10 per cent of the shipment value.

If the $400-a-tonne MEP is implemented, there will be three floor prices applicable on rice exports — $900 for basmati, $850 for premium non-basmati and $400 for ordinary non-basmati. That, in turn, is testimony to the sheer range of rice varieties from India and the prices they command globally.

Even within basmati, the price range starts with $900 a tonne for parboiled Pusa Basmati-1 to $1,020-1,040 for parboiled traditional, $1,080-1,100 for parboiled Pusa-1121 and white Pusa Basmati-1, $1,150 for white traditional and $1,300 for white Pusa-1121. It goes all the way to $1,800 for two-year aged branded white Pusa-1121 rice packed in 10 kg polypropylene bags.

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