Although exporters have signed forward contracts of 1-1.2 million tonnes (MT) monthly till November 2021, total exports are likely to be lower at around 12 MT industry experts said.
High ocean freight rates, non-availability of containers and a price drop in rice rates by Vietnam, Thailand and Pakistan are likely to impact rice exports from India in the season of 2021-22. Although exporters have signed forward contracts of 1-1.2 million tonnes (MT) monthly till November 2021, total exports are likely to be lower at around 12 MT industry experts said. India had achieved the highest-ever exports of 17.72 MT of rice worth $8.89 billion in FY21.
B V Krishna Rao, president, Rice Exporters Association said high freight cost was becoming a major challenge for exporters apart from increasing logistic bottlenecks at ports. “Last two to three months, no containers have been able to leave because of rains and today at least 15 vessels are waiting at the Kakinada port,” he explained.
“In a letter, we have approached the railway ministry to seek additional railway sidings with the opening of the deep-water port. The capacity has doubled from 7 to 15 vessels and, therefore, requires more sidings to cater to the growing requirements,” the association said.
The Indian non-basmati rice trade depends on Indian Railways for interstate logistics as Kakinada port is the main shipment port for non-basmati rice sourced from Chhattisgarh, Maharashtra and Orissa regions to fulfil the shipments. Moreover, Vietnam which turned out to be a major buyer last year has stopped purchasing rice from India from May. Vietnam importers are seeking discounts for the release of cargo, Rao said.
“Thailand, Vietnam and Pakistan have also dropped prices. Last year they had held positions at higher levels. Thailand’s 5% broken rice price is quoted at $380 per tonne. While the price of Vietnam’s 5% broken rice is quoted at $390 per tonne. 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. China is also importing rice in a big way and is likely to import around one million tonne this season, said Rao. 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 costs and container availability were causing major problems for the exporters. “Basmati rice exports are down by 17% in the first three months of FY22. Even non-Basmati rice exports have seen a drop in this period. If the situation does not improve, exports of basmati rice will be 25% less than FY21,” he said.
Total rice exports are likely to drop down to 12 MT in FY 22, he said. Basmati rice exports have been affected badly because 80% of the trade is conducted through containers unlike non-basmati rice which is sent through bulk break vessels, he explained. Bangladesh, however, has reduced import duties from 25% to 15% and this is likely to offset the losses caused to exporters in other countries, he said. But high residue levels in Basmati rice continue to pose a major challenge for exports and Basmati rice export to the European Union (EU) have dropped to 1.7 lakh tonne from 4 lakh tonne in 2017-18.